Examining GCC economic growth and FDI

Examining GCC economic growth and FDI

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The GCC countries are actively adopting policies to draw in foreign investments.

Countries across the world implement various schemes and enact legislations to attract foreign direct investments. Some nations such as the GCC countries are increasingly implementing pliable regulations, while others have actually cheaper labour expenses as their comparative advantage. The benefits of FDI are, needless to say, mutual, as if the international corporation discovers lower labour costs, it will be in a position to cut costs. In addition, in the event that host state can grant better tariffs and savings, the business enterprise could diversify its markets by way of a subsidiary branch. On the other hand, the country will be able to develop its economy, cultivate human capital, increase employment, and provide usage of knowledge, technology, and abilities. Hence, economists argue, that most of the time, FDI has resulted in efficiency by transmitting technology and knowledge towards the country. Nonetheless, investors look at a myriad of factors before making a decision to invest in new market, but one of the significant factors which they think about determinants of investment decisions are geographic location, exchange volatility, political stability and government policies.

To look at the suitability of the Gulf as a destination for foreign direct investment, one must evaluate whether the Arab gulf countries provide the necessary and adequate conditions to encourage direct investments. One of the important factors is governmental security. How can we evaluate a country or perhaps a region's stability? Political security depends up to a large extent on the content of individuals. People of GCC countries have a lot of opportunities to aid them attain their dreams and convert them into realities, helping to make most of them satisfied and happy. Also, international indicators of governmental stability reveal that there's been no major political unrest in the area, as well as the occurrence of such an possibility is highly not likely provided the strong governmental will and also the vision of the leadership in these counties especially in dealing with political crises. Moreover, high rates of misconduct could be extremely harmful to international investments as investors fear risks such as the obstructions of fund transfers and expropriations. Nonetheless, regarding Gulf, economists in a study that compared 200 states classified the gulf countries as being a low risk in both aspects. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely testify that a few corruption indexes concur that the region is enhancing year by year in cutting down corruption.

The volatility of the currency prices is something investors simply take seriously because the vagaries of exchange rate fluctuations may have a direct impact on their profitability. The currencies of gulf counties have all been fixed to the United States currency from the mid 1990s and early 2000s, click here and investors such Farhad Azima in Ras Al Khaimah and Oussama el-Omari in Ras Al Khaimah would likely see the fixed exchange rate as an crucial attraction for the inflow of FDI to the region as investors do not need certainly to be concerned about time and money spent manging the foreign currency risk. Another crucial advantage that the gulf has is its geographical position, situated at the intersection of Europe, Asia, and Africa, the region serves as a gateway towards the quickly growing Middle East market.

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