Examining GCC economic growth and FDI

Examining GCC economic growth and FDI

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The GCC countries are actively implementing policies to bring in international investments.

To look at the suitability regarding the Persian Gulf as being a location for international direct investment, one must evaluate whether the Arab gulf countries provide the necessary and sufficient conditions to promote FDIs. One of the . important criterion is governmental stability. How can we evaluate a country or even a region's stability? Political security depends up to a significant level on the content of people. Citizens of GCC countries have actually an abundance of opportunities to greatly help them attain their dreams and convert them into realities, making a lot of them satisfied and happy. Moreover, worldwide indicators of political stability reveal that there is no major governmental unrest in the area, and the occurrence of such a eventuality is extremely unlikely given the strong governmental will and also the prudence of the leadership in these counties particularly in dealing with crises. Furthermore, high rates of corruption can be hugely harmful to international investments as investors dread hazards for instance the obstructions of fund transfers and expropriations. Nevertheless, when it comes to Gulf, experts in a study that compared 200 counties categorised the gulf countries as a low risk in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that a few corruption indexes make sure the Gulf countries is enhancing year by year in eradicating corruption.

The volatility associated with the exchange rates is something investors just take seriously as the unpredictability of exchange price fluctuations might have a visible impact on the profitability. The currencies of gulf counties have all been fixed to the United States dollar from the mid 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 fixed exchange rate being an essential attraction for the inflow of FDI into the region as investors do not have to worry about time and money spent manging the foreign exchange instability. Another important benefit that the gulf has is its geographic location, situated on the crossroads of three continents, the region functions as a gateway towards the quickly raising Middle East market.

Nations all over the world implement various schemes and enact legislations to attract international direct investments. Some countries such as the GCC countries are increasingly adopting flexible laws, while others have lower labour expenses as their comparative advantage. Some great benefits of FDI are, of course, shared, as if the international firm discovers reduced labour costs, it will be in a position to cut costs. In addition, if the host state can give better tariffs and savings, the business could diversify its markets by way of a subsidiary. Having said that, the state should be able to grow its economy, cultivate human capital, increase employment, and offer usage of knowledge, technology, and skills. Therefore, economists argue, that oftentimes, FDI has led to efficiency by transferring technology and knowledge to the country. Nonetheless, investors think about a many factors before making a decision to invest in a country, but among the list of significant factors that they think about determinants of investment decisions are location, exchange fluctuations, political stability and governmental policies.

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