Examining GCC economic growth and foreign investments

The GCC countries are actively carrying out policies to entice foreign investments.

The volatility regarding the exchange prices is one thing investors simply take seriously as the vagaries of currency exchange price changes may have an impact 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 here see the pegged exchange price as an important attraction for the inflow of FDI to the region as investors don't have to be concerned about time and money spent manging the currency exchange uncertainty. Another crucial benefit that the gulf has is its geographical location, situated on the crossroads of Europe, Asia, and Africa, the region functions as a gateway to the quickly raising Middle East market.

Countries across the world implement various schemes and enact legislations to attract foreign direct investments. Some countries like the GCC countries are increasingly implementing flexible laws and regulations, while some have actually reduced labour costs as their comparative advantage. The many benefits of FDI are, needless to say, shared, as if the multinational corporation finds lower labour expenses, it'll be able to minimise costs. In addition, in the event that host country can grant better tariffs and savings, the business could diversify its markets via a subsidiary. Having said that, the country should be able to grow its economy, cultivate human capital, enhance employment, and provide access to knowledge, technology, and skills. Thus, economists argue, that in many cases, FDI has generated effectiveness by transmitting technology and know-how to the country. Nonetheless, investors look at a many factors before deciding to move in a country, but among the significant variables that they give consideration to determinants of investment decisions are location, exchange fluctuations, political security and governmental policies.

To examine the suitableness regarding the Persian Gulf as a location for foreign direct investment, one must assess if the Arab gulf countries provide the necessary and adequate conditions to promote direct investments. One of the important variables is political security. Just how do we evaluate a state or even a region's security? Political security depends to a significant extent on the satisfaction of residents. People of GCC countries have a lot of opportunities to aid them achieve their dreams and convert them into realities, helping to make many of them satisfied and grateful. Furthermore, global indicators of political stability unveil that there is no major political unrest in in these countries, plus the incident of such an eventuality is highly unlikely given the strong governmental will as well as the vision of the leadership in these counties specially in dealing with crises. Furthermore, high levels of corruption can be extremely harmful to international investments as potential investors fear hazards such as the obstructions of fund transfers and expropriations. However, when it comes to Gulf, economists in a study that compared 200 counties classified the gulf countries as being a low hazard in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that a few corruption indexes confirm that the region is increasing year by year in cutting down corruption.