analysing GCC economic growth and FDI
As nations across the world attempt to attract international direct investments, the Arab Gulf stands out as being a strong possible destination.
Nations around the world implement various schemes and enact legislations to attract international direct investments. Some nations for instance the GCC countries are increasingly adopting pliable laws, while others have actually cheaper labour costs as their comparative advantage. The advantages of FDI are, needless to say, mutual, as if the international firm discovers lower labour costs, it's going to be in a position to reduce costs. In addition, if the host country can give better tariffs and savings, the business could diversify its markets via a subsidiary. On the other hand, the state should be able to develop its economy, cultivate human capital, increase job opportunities, and offer access to knowledge, technology, and skills. Thus, economists argue, that oftentimes, FDI has led to efficiency by transferring technology and knowledge towards the country. However, investors consider a myriad of factors before deciding to invest in a country, but one of the significant variables which they consider determinants of investment decisions are geographic location, exchange fluctuations, political stability and government policies.
To look at the suitability of the Arabian Gulf being a destination for foreign direct investment, one must assess whether the Arab gulf countries provide the necessary and adequate conditions to promote FDIs. One of the important aspects is political stability. Just how do we evaluate a country or perhaps a area's security? Political stability will depend on up to a large level on the content of people. Citizens of GCC countries have a good amount of opportunities to help them achieve their dreams and convert them into realities, which makes a lot of . them satisfied and happy. Additionally, global indicators of governmental stability unveil that there's been no major political unrest in the region, plus the incident of such a possibility is highly unlikely because of the strong governmental determination and the farsightedness of the leadership in these counties especially in dealing with political crises. Moreover, high levels of corruption can be extremely detrimental to foreign investments as investors fear risks such as the blockages of fund transfers and expropriations. However, regarding Gulf, specialists 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 a few corruption indexes confirm that the Gulf countries is improving year by year in reducing corruption.
The volatility of the exchange prices is something investors simply take into account seriously as the vagaries of exchange rate fluctuations may have a visible impact on their profitability. The currencies of gulf counties have all been fixed 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 would likely see the pegged exchange rate as an essential seduction for the inflow of FDI in to the region as investors do not have to be concerned about time and money spent manging the foreign exchange uncertainty. Another important advantage that the gulf has is its geographical position, situated at the crossroads of three continents, the region functions as a gateway to the quickly growing Middle East market.