Examining GCC economic outlook in the coming decade

Examining GCC economic outlook in the coming decade

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As countries across the world strive to attract international direct investments, the Arab Gulf stands apart as a strong potential destination.

The volatility regarding the currency prices is something investors simply take into account seriously due to the fact unpredictability of exchange price changes may have a visible impact on the profitability. The currencies of gulf counties have all been pegged to the United States dollar since the late 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 rate being an crucial seduction for the inflow of FDI into the country as investors do not have to be worried about time and money spent handling the currency exchange uncertainty. Another essential benefit that the gulf has is its geographic position, located at the crossroads of three continents, the region functions as a gateway to the rapidly growing Middle East market.

To examine the viability regarding the Gulf as a location for international direct investment, one must assess if the Arab gulf countries provide the necessary and adequate conditions to encourage FDIs. Among the important factors is political stability. How do we evaluate a state or perhaps a region's security? Political stability will depend . on to a significant level on the content of citizens. People of GCC countries have a good amount of opportunities to aid them achieve their dreams and convert them into realities, which makes most of them content and happy. Also, global indicators of governmental stability reveal that there's been no major political unrest in the area, plus the incident of such a scenario is highly unlikely given the strong political will and the prudence of the leadership in these counties particularly in dealing with political crises. Moreover, high rates of misconduct can be extremely harmful to foreign investments as potential investors fear hazards like the blockages of fund transfers and expropriations. But, regarding Gulf, political scientists in a study that compared 200 states deemed the gulf countries being a low danger in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably testify that a few corruption indexes concur that the Gulf countries is enhancing year by year in cutting down corruption.

Countries all over the world implement various schemes and enact legislations to attract international direct investments. Some countries such as the GCC countries are progressively adopting flexible laws and regulations, while others have actually reduced labour costs as their comparative advantage. Some great benefits of FDI are, of course, mutual, as if the international organization finds reduced labour costs, it will be in a position to reduce costs. In addition, in the event that host state can grant better tariffs and savings, business could diversify its markets through a subsidiary branch. On the other hand, the state should be able to develop its economy, cultivate human capital, enhance employment, and provide usage of expertise, technology, and skills. Therefore, economists argue, that oftentimes, FDI has led to effectiveness by transferring technology and know-how to the host country. However, investors look at a numerous factors before making a decision to move in a country, but one of the significant factors they consider determinants of investment decisions are location, exchange volatility, political security and governmental policies.

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