The GCC economic outlook in the coming decade

The GCC economic outlook in the coming decade

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As countries around the globe strive to attract foreign direct investments, the Arab Gulf stands out as a strong possible destination.

The volatility of the currency rates is something investors simply take into account seriously since the unpredictability of currency exchange rate changes could have a direct effect on their profitability. The currencies of gulf counties have all been pegged to the United States currency since 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 rate being an important seduction for the inflow of FDI into the region as investors do not need to worry about time and money spent manging the forex risk. Another important advantage that the gulf has is its geographic position, situated on the intersection of three continents, the region functions as a gateway towards the quickly raising Middle East market.

To look at the viability of the Persian Gulf being a location for international direct investment, one must evaluate whether the Arab gulf countries give you the necessary and adequate conditions to promote direct investments. One of the consequential criterion is governmental security. Just how do we evaluate a country or perhaps a region's security? Governmental stability will depend on up to a significant extent on the satisfaction of citizens. Citizens of GCC countries have actually a lot of opportunities to greatly help them attain their dreams and convert them into realities, helping to make many of them satisfied and grateful. Furthermore, international indicators of governmental stability show that there is no major governmental unrest in the area, and the occurrence of such a scenario is extremely unlikely given the strong political determination and the vision of the leadership in these counties especially in dealing with political crises. Moreover, high rates of misconduct could be extremely harmful to foreign investments as potential investors dread hazards for instance the blockages of fund transfers and expropriations. But, in terms of Gulf, experts in a study that compared 200 states classified the gulf countries as being a low risk in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that a few corruption indexes make sure the Gulf countries is improving year by year in reducing corruption.

Countries all over the world implement different schemes and enact legislations to attract foreign direct investments. Some countries such as the GCC countries are progressively embracing flexible laws, while others have lower labour expenses as their comparative advantage. The benefits of FDI are, of course, shared, as if the multinational firm discovers reduced labour costs, it will likely be in a position to cut costs. In addition, if the host state can grant better tariffs and savings, business could diversify its markets via a subsidiary branch. Having said that, the country will be able to develop its economy, develop human website capital, increase job opportunities, and provide access to expertise, technology, and abilities. Thus, economists argue, that in many cases, FDI has led to efficiency by transmitting technology and knowledge to the host country. Nevertheless, investors think about a many factors before making a decision to invest in new market, but among the list of significant variables which they think about determinants of investment decisions are geographic location, exchange fluctuations, political stability and government policies.

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