FDI and Middle East economic outlook in the coming decade
FDI and Middle East economic outlook in the coming decade
Blog Article
As countries across the world attempt to attract international direct investments, the Arab Gulf stands out as a strong prospective destination.
The volatility associated with the currency prices is something investors simply take seriously because the unpredictability of exchange price fluctuations may have a direct effect on their 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 may likely view the fixed exchange price as an essential seduction for the inflow of FDI into the country as investors do not have to be worried about time and money spent manging the foreign currency risk. Another important advantage that the gulf has is its geographic position, situated at the crossroads of Europe, Asia, and Africa, the region functions as a gateway towards the rapidly raising Middle East market.
To examine the suitableness regarding the Persian Gulf as a destination for international direct investment, one must evaluate whether or not the Arab gulf countries give you the necessary and adequate conditions to encourage FDIs. Among the important criterion is governmental security. How do we evaluate a state or even a area's security? Political security will depend on up to a significant level on the content of people. Citizens of GCC countries have an abundance of opportunities to simply help them attain their dreams and convert them into realities, helping to make most of them content and grateful. Furthermore, global indicators of political stability reveal that there has been no major political unrest in the area, and also the occurrence of such a eventuality is highly not likely given the strong political will and the vision of the leadership in these counties particularly in dealing with crises. Moreover, high levels of corruption can be extremely detrimental to foreign investments as potential investors fear hazards such as the blockages of fund transfers and expropriations. Nevertheless, regarding Gulf, economists in a study that compared 200 states classified the gulf countries as a low danger in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that several corruption indexes confirm that the GCC countries is enhancing year by year in eliminating corruption.
Countries across the world implement different schemes and enact legislations to attract foreign direct investments. Some nations such as the GCC countries are increasingly adopting flexible legislation, while others have reduced labour costs as their comparative advantage. The many benefits of FDI are, of course, shared, as if the multinational corporation discovers lower labour costs, it will likely be in a position to minimise costs. In addition, if the host country can grant better tariffs and savings, the company could diversify its markets via a subsidiary. On the other hand, the country should be able to grow its economy, develop human capital, enhance employment, and offer access to knowledge, technology, and skills. Therefore, economists argue, that most of the time, FDI has led to effectiveness by transmitting technology and know-how towards the country. However, investors consider a numerous factors before carefully deciding to move in a country, but among the list of significant factors that they give consideration to determinants of investment decisions are location, exchange volatility, governmental security and government policies.
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