foreign direct investment and Middle East economic outlook in the coming decade

foreign direct investment and Middle East economic outlook in the coming decade

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As countries around the world attempt to attract international direct investments, the Arab Gulf stands out as a strong possible destination.

The volatility associated with currency prices is one thing investors simply take seriously since the unpredictability of currency exchange price fluctuations could have an impact on their profitability. The currencies of gulf counties have all been pegged to the US dollar 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 pegged exchange rate as an essential attraction for the inflow of FDI to the region as investors do not need to worry about time and money spent manging the currency exchange instability. Another crucial benefit that the gulf has is its geographical location, situated at the intersection of three continents, the region read more functions as a gateway to the quickly growing Middle East market.

To look at the viability regarding the Gulf as being a destination for international direct investment, one must assess whether the Arab gulf countries provide the necessary and adequate conditions to encourage direct investments. Among the important criterion is political security. How can we assess a country or even a area's stability? Political security depends to a significant level on the satisfaction of people. Citizens of GCC countries have actually an abundance of opportunities to help them attain their dreams and convert them into realities, helping to make most of them satisfied and grateful. Moreover, worldwide indicators of governmental stability unveil that there's been no major political unrest in in these countries, plus the incident of such an possibility is very not likely given the strong governmental determination plus the vision of the leadership in these counties specially in dealing with crises. Furthermore, high rates of misconduct can be extremely harmful to international investments as investors dread hazards such as the blockages of fund transfers and expropriations. However, in terms of Gulf, experts in a study that compared 200 states categorised the gulf countries as being a low risk in both categories. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that several corruption indexes concur that the Gulf countries is enhancing year by year in eradicating corruption.

Nations around the globe implement different schemes and enact legislations to attract foreign direct investments. Some nations for instance the GCC countries are increasingly implementing flexible legislation, while others have cheaper labour expenses as their comparative advantage. Some great benefits of FDI are, of course, mutual, as if the multinational organization discovers reduced labour costs, it is able to minimise costs. In addition, if the host state can give better tariffs and savings, the company could diversify its markets by way of a subsidiary branch. On the other hand, the state should be able to develop its economy, cultivate human capital, increase employment, and provide access to expertise, technology, and skills. Thus, economists argue, that in many cases, FDI has generated efficiency by transmitting technology and know-how towards the host country. Nevertheless, investors consider a numerous factors before deciding to invest in a state, but among the significant variables that they consider determinants of investment decisions are geographic location, exchange fluctuations, political security and governmental policies.

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