analysing GCC economic growth and FDI

analysing GCC economic growth and FDI

Blog Article

As countries across the world strive to attract foreign direct investments, the Arab Gulf stands apart as being a strong potential destination.

The volatility associated with the exchange prices is something investors simply take into account seriously due to the fact vagaries of currency exchange rate changes might have an effect on the profitability. The currencies of gulf counties have all been fixed to the United States currency since the mid 1990s and early 2000s, and investors such Farhad Azima in Ras Al Khaimah and Oussama el-Omari in Ras Al Khaimah may likely see the fixed exchange price being an important attraction for the inflow of FDI into the region as investors do not have to worry about time and money spent handling the foreign currency uncertainty. Another essential benefit that the gulf has is its geographic position, located on the crossroads of Europe, Asia, and Africa, the region serves as a gateway to the rapidly growing Middle East market.

Nations around the world implement various schemes and enact legislations to attract foreign direct investments. Some nations like the GCC countries are progressively embracing flexible regulations, while some have reduced labour costs as their comparative advantage. The many benefits website of FDI are, needless to say, mutual, as if the multinational organization finds lower labour expenses, it will likely be able to cut costs. In addition, if the host country can grant better tariffs and savings, the business could diversify its markets via a subsidiary branch. Having said that, the country should be able to grow its economy, cultivate human capital, increase employment, and provide access to knowledge, technology, and abilities. Hence, economists argue, that in many cases, FDI has resulted in effectiveness by transmitting technology and know-how to the country. However, investors look at a myriad of aspects before deciding to move in new market, but one of the significant factors which they consider determinants of investment decisions are location, exchange fluctuations, political stability and government policies.

To examine the viability regarding the Gulf being a destination for foreign direct investment, one must assess if the Arab gulf countries provide the necessary and sufficient conditions to promote direct investments. One of many important elements is political security. How can we assess a state or even a area's stability? Governmental stability depends up to a large level on the satisfaction of citizens. Citizens of GCC countries have a lot of opportunities to simply help them achieve their dreams and convert them into realities, making most of them content and grateful. Also, worldwide indicators of political stability reveal that there has been no major governmental unrest in the area, plus the occurrence of such a possibility is highly unlikely given the strong governmental determination as well as the farsightedness of the leadership in these counties particularly in dealing with political crises. Moreover, high levels of corruption could be extremely harmful to international investments as investors fear hazards like the obstructions of fund transfers and expropriations. Nevertheless, in terms of Gulf, specialists in a study that compared 200 counties categorised 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 confirm that the GCC countries is improving year by year in eradicating corruption.

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