FDI and Middle East economic outlook in the coming decade

FDI and Middle East economic outlook in the coming decade

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The GCC countries are earnestly developing policies to attract international investments.

The volatility associated with exchange prices is something investors just take seriously since the vagaries of currency exchange price changes could have a direct effect on their profitability. The currencies of gulf counties have all been pegged to the United States currency 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 see the fixed exchange price being an essential attraction for the inflow of FDI into the country as investors don't need certainly to worry about time and money spent manging the foreign exchange risk. Another crucial benefit that the gulf has is its geographical location, situated on the crossroads of Europe, Asia, and Africa, the region functions as a gateway to the rapidly growing Middle East market.

Countries across the world implement various schemes and enact legislations to attract foreign direct investments. Some countries like the GCC countries are progressively implementing flexible laws and regulations, while some have actually cheaper labour costs as their comparative advantage. The many benefits of FDI are, needless to say, shared, as if the multinational company discovers lower labour costs, it is in a position to reduce costs. In addition, if the host country can give better tariffs and savings, the business enterprise . could diversify its markets via a subsidiary. On the other hand, the country should be able to develop its economy, develop human capital, increase employment, and provide access to knowledge, technology, and skills. Hence, economists argue, that oftentimes, FDI has led to efficiency by transmitting technology and know-how towards the country. However, investors look at a myriad of aspects before carefully deciding to invest in a state, but one of the significant factors which they consider determinants of investment decisions are location, exchange fluctuations, political security and government policies.

To examine the viability of the Gulf as being a destination for foreign direct investment, one must evaluate whether the Arab gulf countries provide the necessary and sufficient conditions to promote direct investments. One of the important aspects is governmental security. How do we evaluate a state or perhaps a area's security? Political security will depend on up to a large degree on the satisfaction of individuals. Citizens of GCC countries have lots of opportunities to simply help them achieve their dreams and convert them into realities, helping to make most of them content and grateful. Furthermore, worldwide indicators of governmental stability unveil that there is no major political unrest in the area, plus the occurrence of such a scenario is highly unlikely because of the strong political will plus the prudence of the leadership in these counties specially in dealing with political crises. Moreover, high rates of misconduct could be extremely detrimental to foreign investments as potential investors dread risks such as the blockages of fund transfers and expropriations. Nevertheless, in terms of Gulf, specialists in a study that compared 200 counties deemed the gulf countries as a low danger in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely attest that a few corruption indexes confirm that the region is improving year by year in cutting down corruption.

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