foreign direct investment and Middle East economic outlook in the coming decade

As nations around the world strive to attract international direct investments, the Arab Gulf stands apart as a strong potential destination.

The volatility associated with the exchange prices is something investors simply take into account seriously as the vagaries of exchange price changes might have a direct impact on their profitability. The currencies of gulf counties have all been fixed to the US currency since the late 1990s and early 2000s, and investors such Farhad Azima in Ras Al Khaimah and Oussama el-Omari in Ras Al Khaimah would likely see the fixed exchange price being an crucial attraction for the inflow of FDI to the region as investors do not need to be worried about time and money spent handling the forex instability. Another important advantage that the gulf has is its geographic location, situated at the crossroads of three continents, the region functions as a gateway towards the rapidly growing Middle East market.

Nations around the globe implement different schemes and enact legislations to attract foreign direct investments. Some nations like the GCC countries are progressively embracing flexible laws, while others have here lower labour expenses as their comparative advantage. The many benefits of FDI are, needless to say, mutual, as if the multinational company finds lower labour costs, it will be able to reduce costs. In addition, if the host state can grant better tariffs and savings, the company could diversify its markets by way of a subsidiary. On the other hand, the country should be able to grow its economy, cultivate human capital, enhance job opportunities, and provide access to expertise, technology, and skills. Therefore, economists argue, that most of the time, FDI has resulted in efficiency by transferring technology and know-how to the country. Nevertheless, investors consider a many factors before deciding to invest in a state, but one of the significant factors they give consideration to determinants of investment decisions are position on the map, exchange volatility, governmental stability and government policies.

To look at the viability regarding the Gulf being a location for international direct investment, one must evaluate if the Arab gulf countries provide the necessary and adequate conditions to promote direct investments. One of many important criterion is governmental security. How do we assess a country or even a area's security? Governmental security depends up to a large level on the satisfaction of inhabitants. People of GCC countries have actually plenty of opportunities to aid them attain their dreams and convert them into realities, which makes most of them satisfied and grateful. Furthermore, global indicators of governmental stability show that there's been no major governmental unrest in the area, as well as the occurrence of such an eventuality is very unlikely because of the strong political will as well as the farsightedness of the leadership in these counties specially in dealing with crises. Moreover, high rates of misconduct could be extremely detrimental to foreign investments as investors fear hazards such as the obstructions of fund transfers and expropriations. But, regarding Gulf, economists in a study that compared 200 states categorised the gulf countries being a low danger in both categories. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely attest that several corruption indexes make sure the GCC countries is increasing year by year in reducing corruption.