As nations around the world make an effort to attract international direct investments, the Arab Gulf stands apart as being a strong prospective destination.

The volatility associated with the currency rates is something investors just take into account seriously due to the fact unpredictability of exchange rate changes could have a direct impact on their 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 fixed exchange price as an important seduction for the inflow of FDI into the country as investors do not need to be worried about time and money spent handling the foreign exchange risk. Another important advantage that the gulf has is its geographic position, located on the crossroads of Europe, Asia, and Africa, the region serves as a gateway to the quickly raising Middle East market.

To examine the suitability of the Gulf as a destination for international direct investment, one must evaluate whether the Arab gulf countries provide the necessary and sufficient conditions to promote FDIs. Among the consequential factors is governmental security. How do we assess a country or perhaps a area's stability? Political stability depends up to a significant level on the content of residents. Citizens of GCC countries have actually lots of opportunities to greatly help them achieve their dreams and convert them into realities, which makes most of them content and grateful. Additionally, international indicators of governmental stability reveal that there has been no major governmental unrest in the area, and also the occurrence of such a possibility is very not likely provided the strong governmental will as well as the vision of the leadership in these counties especially in dealing with political crises. Moreover, high levels of corruption can be extremely harmful to foreign investments as potential investors dread risks like the obstructions of fund transfers and expropriations. Nevertheless, regarding Gulf, specialists in a study that compared 200 counties categorised the gulf countries as being a low risk in both categories. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely attest that several corruption indexes confirm that the region is improving year by year in eliminating corruption.

Nations all over the world implement various schemes and enact legislations to attract foreign direct investments. Some nations such as the GCC countries are progressively adopting flexible legislation, while others have actually lower labour costs as their comparative advantage. The advantages of FDI are, of course, shared, as if the multinational firm finds lower labour expenses, it will be in a position to cut costs. In addition, in the event that host country can grant better tariffs and savings, business could diversify its markets by way of a subsidiary. Having said that, the state should be able to develop its economy, cultivate human capital, increase employment, and offer usage of expertise, technology, and abilities. Thus, economists argue, that most of the time, FDI has resulted in effectiveness by transferring technology and knowledge to the host country. Nevertheless, investors look at a myriad of aspects before carefully deciding to invest website in new market, but one of the significant factors they consider determinants of investment decisions are location, exchange fluctuations, political security and governmental policies.