The GCC economic outlook in the coming decade

The GCC economic outlook in the coming decade

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Governments worldwide are implementing different schemes and legislations to attract foreign direct investments.

Countries across the world implement various schemes and enact legislations to attract foreign direct investments. Some countries for instance the GCC countries are increasingly adopting flexible legislation, while some have actually reduced labour costs as their comparative advantage. The benefits of FDI are, needless to say, mutual, as if the multinational company discovers reduced labour expenses, it will be able to minimise 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 will be able to grow its economy, develop human capital, enhance employment, and offer usage of expertise, technology, and abilities. Hence, economists argue, that in many cases, FDI has generated effectiveness by transferring technology and knowledge to the host country. Nevertheless, investors look at a myriad of factors before making a decision to invest in a country, but one of the significant factors they think about determinants of investment decisions are location, exchange volatility, governmental security and government policies.

The volatility associated with exchange rates is one thing investors just take into account seriously due to the fact vagaries of exchange price changes may have an effect on the profitability. The currencies of gulf counties have all been pegged 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 price being an important seduction for the inflow of FDI into the region as investors don't have to be worried about time and money spent handling the foreign currency risk. Another important benefit that the gulf has is its geographic position, located on the crossroads of three continents, the region functions as a gateway to the rapidly raising Middle East market.

To examine the viability regarding the Persian Gulf as being a destination for international direct investment, one must assess whether or not the Arab gulf countries provide the necessary and sufficient conditions to promote FDIs. One of the important variables is political stability. How can we assess a country or perhaps a area's stability? Political stability depends to a significant extent on the content of people. Citizens of GCC countries have actually an abundance of opportunities to simply help them attain their dreams and convert them here into realities, making a lot of them satisfied and grateful. Furthermore, global indicators of governmental stability reveal that there's been no major political unrest in the area, and also the occurrence of such a scenario is highly unlikely given the strong governmental will and the farsightedness of the leadership in these counties especially in dealing with crises. Moreover, high rates of misconduct can be hugely harmful to international investments as investors dread risks for instance the blockages of fund transfers and expropriations. Nevertheless, regarding Gulf, economists in a study that compared 200 counties deemed the gulf countries being a low risk in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably testify that several corruption indexes confirm that the region is improving year by year in reducing corruption.

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