analysing GCC economic growth and FDI

analysing GCC economic growth and FDI

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The GCC countries are earnestly carrying out policies to attract international investments.

Nations across the world implement various schemes and enact legislations to attract international direct investments. Some countries for instance the GCC countries are progressively implementing pliable laws, while others have actually cheaper labour expenses as their comparative advantage. Some great benefits of FDI are, of course, mutual, as if the multinational business finds lower labour costs, it is able to reduce costs. In addition, in the event that host state can give better tariffs and savings, the business could diversify its markets by way of a subsidiary. Having said that, the state should be able to grow its economy, develop human capital, enhance job opportunities, and provide access to knowledge, technology, and skills. Thus, economists argue, that most of the time, FDI has resulted in effectiveness by transferring technology and know-how to the country. However, investors think about a many aspects before making a decision to invest in a state, but among the list of significant factors which they give consideration to determinants of investment decisions are location, exchange fluctuations, governmental stability and governmental policies.

To examine the suitableness regarding the Arabian Gulf as a destination for international direct investment, one must evaluate whether or not the Arab gulf countries provide the necessary and sufficient conditions to promote direct investments. One of the important criterion is political stability. How can we evaluate a country or perhaps a region's stability? Political security will depend on to a significant level on the content of people. People of GCC countries have a good amount of opportunities to help them achieve their dreams and convert them into realities, making most of them content and happy. Additionally, worldwide indicators of political stability reveal that there's been no major political unrest in the area, and the occurrence of such an eventuality is highly unlikely provided the strong governmental will and the vision of the leadership in these counties especially in dealing with crises. Furthermore, high levels of corruption can be hugely harmful to foreign investments as investors fear risks like the blockages of fund transfers and expropriations. Nevertheless, read more in terms of Gulf, political scientists in a study that compared 200 counties categorised the gulf countries as a low hazard in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely testify that several corruption indexes make sure the region is increasing year by year in cutting down corruption.

The volatility associated with exchange prices is something investors just take seriously because the unpredictability of exchange price fluctuations may have a visible impact on the profitability. The currencies of gulf counties have all been pegged to the US 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 would likely see the pegged exchange rate as an crucial seduction for the inflow of FDI in to the region as investors don't need to worry about time and money spent manging the foreign exchange risk. Another crucial benefit that the gulf has is its geographic location, situated on the crossroads of three continents, the region serves as a gateway to the quickly raising Middle East market.

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