FDI and Middle East economic outlook in in the coming 10 years

FDI and Middle East economic outlook in in the coming 10 years

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

The volatility associated with the exchange prices is something investors simply take seriously since the unpredictability of exchange rate fluctuations might have a direct impact on the profitability. The currencies of gulf counties have all been fixed to the US dollar since the late 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 price being an important seduction for the inflow of FDI in to the country as investors do not need certainly to worry about time and money spent manging the foreign exchange instability. Another important advantage that the gulf has is its geographic position, situated on the crossroads of three continents, the region functions as a gateway to the rapidly growing Middle East market.

To look at the suitability of the Arabian Gulf as being a destination for international direct investment, one must evaluate whether the Arab gulf countries provide the necessary and adequate conditions to encourage direct investments. One of the here consequential factors is political security. How can we evaluate a country or even a region's security? Political stability depends up to a large level on the content of individuals. Citizens of GCC countries have a good amount of opportunities to simply help them achieve their dreams and convert them into realities, helping to make many of them satisfied and grateful. Moreover, worldwide indicators of governmental stability reveal that there's been no major governmental unrest in the region, as well as the occurrence of such an scenario is highly not likely given the strong political will plus the prescience of the leadership in these counties especially in dealing with political crises. Furthermore, high rates of misconduct could be extremely harmful to foreign investments as investors fear risks for instance the obstructions of fund transfers and expropriations. Nonetheless, when it comes to Gulf, experts in a study that compared 200 counties classified the gulf countries as being a low risk in both categories. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely testify that a few corruption indexes make sure the Gulf countries is improving year by year in cutting down corruption.

Countries across the world implement different schemes and enact legislations to attract foreign direct investments. Some nations like the GCC countries are increasingly implementing pliable legislation, while some have reduced labour expenses as their comparative advantage. The benefits of FDI are, needless to say, shared, as if the international firm finds lower labour costs, it will be in a position to minimise costs. In addition, if the host state can give better tariffs and savings, business could diversify its markets through a subsidiary. On the other hand, the country should be able to grow its economy, develop human capital, increase job opportunities, and provide access to knowledge, technology, and skills. Therefore, economists argue, that in many cases, FDI has generated efficiency by transferring technology and knowledge to the country. Nonetheless, investors look at a myriad of aspects before making a decision to move in a country, but among the significant variables which they give consideration to determinants of investment decisions are position on the map, exchange fluctuations, political stability and governmental policies.

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