Examining GCC economic growth and FDI

Examining GCC economic growth and FDI

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The GCC countries are actively implementing policies to attract foreign investments.

To look at the suitableness of the Persian Gulf as being a destination for international direct investment, one must assess whether or not the Arab gulf countries provide the necessary and sufficient conditions to promote direct investments. One of the consequential criterion is political stability. How can we assess a country or perhaps a region's security? Governmental stability depends up to a significant extent on the content of people. People of GCC countries have a lot of opportunities to . greatly help them attain their dreams and convert them into realities, helping to make most of them satisfied and grateful. Additionally, international indicators of political stability reveal that there's been no major governmental unrest in the region, as well as the occurrence of such an eventuality is extremely unlikely provided the strong governmental will and the prescience of the leadership in these counties particularly in dealing with political crises. Furthermore, high levels of corruption could be extremely harmful to international investments as potential investors dread hazards for instance the blockages of fund transfers and expropriations. However, in terms of Gulf, economists in a study that compared 200 states categorised the gulf countries as being a low risk in both aspects. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that a few corruption indexes confirm that the region is improving year by year in eradicating corruption.

Countries across the world implement various schemes and enact legislations to attract international direct investments. Some countries such as the GCC countries are progressively implementing pliable laws and regulations, while others have reduced labour costs as their comparative advantage. The advantages of FDI are, needless to say, shared, as if the international firm discovers reduced labour expenses, it'll be in a position to cut costs. In addition, in the event that host state can grant better tariffs and savings, the business could diversify its markets by way of a subsidiary branch. On the other hand, the state will be able to grow its economy, develop human capital, increase job opportunities, and provide usage of expertise, technology, and skills. Hence, economists argue, that oftentimes, FDI has generated efficiency by transferring technology and know-how towards the country. Nonetheless, investors consider a many aspects before making a decision to invest in a country, but among the list of significant variables which they consider determinants of investment decisions are location, exchange volatility, political security and governmental policies.

The volatility regarding the currency prices is something investors just take into account seriously as the unpredictability of currency exchange rate changes may have a visible impact on their profitability. The currencies of gulf counties have all been pegged to the US dollar from 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 view the pegged exchange price as an essential attraction for the inflow of FDI to the region as investors don't need certainly to be concerned about time and money spent handling the forex instability. Another crucial benefit that the gulf has is its geographical location, located on the crossroads of three continents, the region functions as a gateway to the rapidly raising Middle East market.

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