Examining GCC economic outlook in the coming decade

Examining GCC economic outlook in the coming decade

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As nations across the world strive to attract international direct investments, the Arab Gulf stands out being a strong prospective destination.

To look at the suitableness of the Persian Gulf being a location for foreign direct investment, one must assess whether the Arab gulf countries provide the necessary and sufficient conditions to encourage FDIs. Among the important criterion is governmental security. Just how do we assess a country or even a region's security? Political security depends to a significant degree on the satisfaction of people. People of GCC countries have a lot of opportunities to greatly help them attain their dreams and convert them into realities, helping to make most of them satisfied and grateful. Moreover, international indicators of political stability unveil that there's been no major political unrest in the area, as well as the occurrence of such a eventuality is very unlikely provided the strong governmental will plus the prudence of the leadership in these counties especially in dealing with crises. Furthermore, high rates of corruption could be extremely harmful to international investments as investors dread risks such as the obstructions of fund transfers and expropriations. Nevertheless, when it comes to Gulf, economists in a study that compared 200 states categorised the gulf countries as being a low hazard in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably testify that several corruption indexes concur that the GCC countries here is improving year by year in eliminating corruption.

The volatility associated with currency rates is one thing investors simply take seriously because the vagaries of currency exchange price fluctuations may have a visible impact on their profitability. The currencies of gulf counties have all been pegged to the United States 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 would likely view the fixed exchange price being an important seduction for the inflow of FDI in to the region as investors do not need certainly to worry about time and money spent handling the foreign exchange instability. Another crucial benefit that the gulf has is its geographical location, situated at the crossroads of three continents, the region functions as a gateway to the quickly raising Middle East market.

Nations all over the world implement various schemes and enact legislations to attract international direct investments. Some countries like the GCC countries are increasingly adopting flexible laws, while others have reduced labour expenses as their comparative advantage. The advantages of FDI are, of course, shared, as if the multinational firm finds reduced labour costs, it's going to be able to reduce costs. In addition, in the event that host country can grant better tariffs and savings, the business could diversify its markets through a subsidiary branch. Having said that, the state will be able to grow its economy, develop human capital, increase job opportunities, and provide usage of expertise, technology, and abilities. Therefore, economists argue, that in many cases, FDI has generated effectiveness by transferring technology and know-how to the country. However, investors look at a myriad of factors before deciding to invest in a state, but one of the significant factors which they consider determinants of investment decisions are position on the map, exchange volatility, governmental stability and government policies.

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