Governments worldwide are implementing various schemes and legislations to attract international direct investments.
Nations around the world implement different schemes and enact legislations to attract foreign direct investments. Some nations like the GCC countries are progressively adopting pliable regulations, while some have lower labour costs as their comparative advantage. The many benefits of FDI are, of course, shared, as if the international business discovers lower labour costs, it will likely be in a position to reduce costs. In addition, in the event that host state can give better tariffs and savings, the business enterprise could diversify its markets by way of a subsidiary branch. On the other hand, the country should be able to develop its economy, develop human capital, enhance job opportunities, and offer access to knowledge, technology, and skills. Hence, economists argue, that oftentimes, FDI has resulted in efficiency by transferring technology and know-how to the country. Nevertheless, investors look at a numerous factors before carefully deciding to invest in new market, but among the list of significant variables which they think about determinants of investment decisions are location, exchange volatility, political security and governmental policies.
The volatility associated with the currency prices is something investors simply take into account seriously as the unpredictability of currency exchange rate fluctuations may have a direct effect on the profitability. The currencies of gulf counties have all been pegged to the US dollar since the late 1990s and early 2000s, and investors such Farhad Azima in Ras Al Khaimah and Oussama el-Omari in Ras Al Khaimah may likely view the fixed exchange rate as an crucial seduction for the inflow of FDI into the country as investors don't need to worry about time and money spent handling the currency exchange instability. Another important advantage that the gulf has is its geographical position, situated at the crossroads of Europe, Asia, and Africa, the region functions as a gateway towards the rapidly growing Middle East market.
To look at the suitableness regarding the Gulf as a location for international direct investment, one must assess whether or not the Arab gulf countries provide the necessary and sufficient conditions to encourage FDIs. One of the consequential aspects is governmental security. How do we evaluate a country or perhaps a area's security? Political stability depends up to a large extent on the satisfaction of residents. Citizens of GCC countries have a great amount of opportunities to help them achieve their dreams and convert them into realities, which makes a lot of them content and happy. Additionally, worldwide indicators of political stability show that there's been no major political unrest in the region, and the incident of such an scenario is highly unlikely provided the strong political will and the prescience of the leadership in these counties particularly in dealing with crises. Moreover, high levels of misconduct can be hugely harmful to foreign investments as potential investors dread hazards for instance the obstructions of fund transfers and expropriations. Nevertheless, in terms of Gulf, political scientists in a study that compared 200 counties deemed the gulf countries as a low risk in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely testify that several corruption indexes make sure the Gulf countries is check here increasing year by year in cutting down corruption.