The GCC economic outlook in the coming decade

The GCC economic outlook in the coming decade

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The GCC countries are earnestly developing policies to entice foreign investments.

To look at the viability of the Arabian Gulf being a destination for foreign direct investment, one must assess whether or not the Arab gulf countries provide the necessary and sufficient conditions to promote FDIs. One of the consequential factors is governmental security. Just how do we assess a state or even a region's stability? Governmental security depends to a large degree on the content of residents. People of GCC countries have lots of opportunities to help them attain their dreams and convert them into realities, which makes most of them content and grateful. Also, worldwide indicators of governmental stability show that there's been no major political unrest in the region, and the incident of such an eventuality is extremely unlikely provided the strong political will plus the prudence of the leadership in these counties specially in dealing with political crises. Furthermore, high rates of corruption could be extremely detrimental to international investments as potential investors dread risks like the obstructions of fund transfers and expropriations. Nonetheless, when it comes to Gulf, specialists in a study that compared 200 states categorised the gulf countries being a low danger in both aspects. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably testify that a few corruption indexes confirm that the region is improving year by year in eradicating corruption.

The volatility associated with the exchange prices is one thing investors just take seriously because the vagaries of currency exchange price changes might have a direct impact on the profitability. The currencies of gulf counties have all been pegged to the US dollar from 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 view the pegged exchange price being an crucial seduction here for the inflow of FDI to the country as investors do not need certainly to be worried about time and money spent handling the currency exchange risk. Another important benefit that the gulf has is its geographical position, located at the crossroads of three continents, the region functions as a gateway towards the quickly growing Middle East market.

Countries around the world implement various schemes and enact legislations to attract international direct investments. Some nations such as the GCC countries are increasingly adopting flexible laws and regulations, while others have reduced labour expenses as their comparative advantage. Some great benefits of FDI are, needless to say, shared, as if the multinational business finds lower labour expenses, it is able to cut costs. In addition, if the host state can give better tariffs and savings, the business could diversify its markets through a subsidiary. Having said that, the country will be able to develop its economy, develop human capital, enhance employment, and offer access to knowledge, technology, and abilities. Therefore, economists argue, that oftentimes, FDI has resulted in efficiency by transmitting technology and knowledge to the host country. However, investors consider a numerous factors before deciding to invest in new market, but among the list of significant variables which they consider determinants of investment decisions are location, exchange volatility, governmental stability and governmental policies.

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