The GCC countries are actively implementing policies to entice foreign investments.
The volatility of the currency prices is one thing investors just take into account seriously as the unpredictability of exchange rate fluctuations may have an effect on their profitability. The currencies of gulf counties have all been fixed to the United States currency from 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 see the fixed exchange rate as an essential attraction for the inflow of FDI to the country as investors do not have to worry about time and money spent handling the foreign currency uncertainty. Another essential advantage that the gulf has is its geographic position, located at the crossroads of Europe, Asia, and Africa, the region serves as a gateway to the rapidly raising Middle East market.
To examine the suitableness regarding the Gulf being a location for international direct investment, one must evaluate if the Arab gulf countries provide the necessary and adequate conditions to promote direct investments. One of many here consequential criterion is governmental security. How can we evaluate a state or perhaps a region's stability? Governmental stability will depend on up to a significant degree on the content of people. Citizens of GCC countries have a great amount of opportunities to help them achieve their dreams and convert them into realities, helping to make a lot of them content and grateful. Furthermore, global indicators of political stability show that there is no major governmental unrest in the region, plus the incident of such a scenario is highly unlikely given the strong governmental will and the prescience of the leadership in these counties especially in dealing with political crises. Moreover, high levels of corruption can be hugely harmful to foreign investments as potential investors fear risks including the obstructions of fund transfers and expropriations. But, regarding Gulf, economists in a study that compared 200 states categorised the gulf countries as a low risk in both aspects. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that several corruption indexes confirm that the region is enhancing year by year in cutting down corruption.
Countries around the world implement different schemes and enact legislations to attract international direct investments. Some countries such as the GCC countries are progressively implementing pliable regulations, while some have actually reduced labour expenses as their comparative advantage. Some great benefits of FDI are, needless to say, mutual, as if the international corporation discovers reduced labour costs, it will be able to minimise costs. In addition, in the event that host state can give better tariffs and savings, the business could diversify its markets by way of a subsidiary branch. On the other hand, the state will be able to grow its economy, cultivate human capital, enhance job opportunities, and provide access to knowledge, technology, and skills. Hence, economists argue, that in many cases, FDI has resulted in efficiency by transmitting technology and knowledge towards the country. Nevertheless, investors look at a myriad of aspects before making a decision to move in new market, but among the list of significant factors which they think about determinants of investment decisions are geographic location, exchange fluctuations, political security and government policies.