The GCC countries are actively implementing policies to entice international investments.

The volatility of the exchange prices is one thing investors just take seriously as the vagaries of exchange price changes may have an effect on the profitability. The currencies of gulf counties have all been pegged to the United States dollar since the late 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 rate being an important attraction for the inflow of FDI to the country as investors don't have to be worried about time and money spent manging the forex instability. Another essential benefit that the gulf has is its geographical position, situated on the crossroads of three continents, the region functions as a gateway to the rapidly raising Middle East market.

Countries around the world implement different schemes and enact legislations to attract international direct investments. Some nations like the GCC countries are increasingly adopting pliable laws, while some have lower labour costs as their comparative advantage. The advantages of FDI are, of course, shared, as if the multinational corporation discovers reduced labour costs, it is able to minimise costs. In addition, in the event get more info that host state can give better tariffs and savings, the business enterprise could diversify its markets via a subsidiary branch. Having said that, the country should be able to develop its economy, cultivate human capital, increase employment, and offer access to expertise, technology, and abilities. Thus, economists argue, that most of the time, FDI has resulted in efficiency by transmitting technology and knowledge towards the host country. However, investors look at a numerous factors before carefully deciding to invest in a state, but among the significant factors which they give consideration to determinants of investment decisions are location, exchange volatility, political security and government policies.

To examine the suitableness regarding the Gulf being a destination for international direct investment, one must evaluate if the Arab gulf countries provide the necessary and adequate conditions to encourage FDIs. One of many important elements is political stability. How can we assess a country or even a region's security? Governmental stability depends to a large degree on the satisfaction of people. People of GCC countries have a great amount of opportunities to aid them attain their dreams and convert them into realities, helping to make most of them content and happy. Also, worldwide indicators of political stability reveal that there has been no major governmental unrest in the region, and the incident of such a eventuality is highly unlikely given the strong political will as well as the prescience of the leadership in these counties especially in dealing with political crises. Moreover, high levels of corruption can be extremely harmful to international investments as investors fear hazards like the blockages of fund transfers and expropriations. However, regarding Gulf, political scientists in a study that compared 200 counties categorised the gulf countries being a low risk in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely testify that a few corruption indexes confirm that the GCC countries is improving year by year in cutting down corruption.