The GCC economic outlook in the coming 10 years

As countries across the world make an effort to attract international direct investments, the Arab Gulf stands apart being a strong possible destination.

Countries around the globe implement different schemes and enact legislations to attract foreign direct investments. Some countries like the GCC countries are progressively adopting pliable regulations, while others have actually cheaper labour costs as their comparative advantage. The advantages of FDI are, needless to say, mutual, as if the international business finds reduced labour expenses, it is able to reduce costs. In addition, in the event that host state can give better tariffs and savings, the company could diversify its markets via a subsidiary branch. On the other hand, the state will be able to develop its economy, cultivate human capital, increase job opportunities, and offer usage of knowledge, technology, and here abilities. Hence, economists argue, that in many cases, FDI has resulted in effectiveness by transferring technology and know-how towards the host country. However, investors look at a many aspects before deciding to invest in new market, but among the significant factors they think about determinants of investment decisions are position on the map, exchange volatility, governmental stability and governmental policies.

To examine the viability of the Gulf as being a destination for international direct investment, one must assess whether the Arab gulf countries provide the necessary and adequate conditions to encourage FDIs. One of the important variables is governmental stability. How do we assess a state or even a region's stability? Governmental security will depend on to a significant extent on the content of people. People of GCC countries have a great amount of opportunities to help them attain their dreams and convert them into realities, making a lot of them content and grateful. Also, worldwide indicators of political stability reveal that there has been no major governmental unrest in in these countries, plus the incident of such a possibility is very not likely given the strong political will and the vision of the leadership in these counties specially in dealing with political crises. Furthermore, high levels of misconduct could be extremely harmful to foreign investments as investors fear hazards like the blockages of fund transfers and expropriations. Nevertheless, in terms of Gulf, political scientists in a study that compared 200 counties classified the gulf countries being a low risk in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that a few corruption indexes make sure the GCC countries is increasing year by year in reducing corruption.

The volatility associated with exchange rates is one thing investors simply take into account seriously as the unpredictability of currency exchange price fluctuations may have a visible impact on the profitability. The currencies of gulf counties have all been pegged to the United States dollar since the mid 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 pegged exchange rate as an important seduction for the inflow of FDI to the region as investors do not need to worry about time and money spent manging the foreign exchange uncertainty. Another essential advantage that the gulf has is its geographical location, situated on the crossroads of three continents, the region functions as a gateway towards the quickly raising Middle East market.