The GCC countries are earnestly carrying out policies to draw in foreign investments.

The volatility regarding the exchange rates is one thing investors simply take into account seriously since the unpredictability of exchange rate changes could have an impact on their profitability. The currencies of gulf counties have all been pegged 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 pegged exchange rate as an important attraction for the inflow of FDI to the region as investors don't need certainly to be concerned about time and money spent manging the foreign exchange instability. Another crucial benefit that the gulf has is its geographic position, located on the intersection of three continents, the region serves as a gateway to the quickly raising Middle East market.

To look at the suitability of the Gulf as being a destination for international direct investment, one must evaluate if the Arab gulf countries provide the necessary and sufficient conditions to encourage direct investments. One of many consequential criterion is governmental stability. How can we evaluate a country or perhaps a region's stability? Political security will depend on to a significant level on the satisfaction of people. Citizens of GCC countries have plenty of opportunities to help them attain their dreams and convert them into realities, making a lot of them satisfied and grateful. Furthermore, global indicators of governmental stability unveil that there's been no major governmental unrest in in these countries, plus the occurrence of such an possibility is extremely not likely provided the strong political determination as well as the vision of the leadership in these counties specially in dealing with political crises. Moreover, high levels of corruption can be hugely detrimental to foreign investments as potential investors dread risks including the obstructions of fund transfers and expropriations. Nevertheless, regarding Gulf, experts in a study that compared 200 counties deemed the gulf countries as a low hazard in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that several corruption indexes make sure the Gulf countries is increasing year by year in reducing corruption.

Nations across the world implement various schemes and enact legislations to attract foreign direct investments. Some countries for instance the GCC countries are increasingly adopting flexible laws and regulations, while others have reduced labour costs as their comparative advantage. Some great benefits of FDI are, needless to say, mutual, as if the international firm finds reduced labour costs, it is able to reduce costs. In addition, if the host state can give better tariffs and savings, the business could diversify its markets via a subsidiary branch. On the other hand, the state should be able to develop its economy, develop human capital, increase . job opportunities, and offer access to expertise, technology, and abilities. Therefore, economists argue, that most of the time, FDI has resulted in effectiveness by transmitting technology and knowledge towards the country. Nevertheless, investors look at a many aspects before making a decision to move in a state, but among the significant variables which they consider determinants of investment decisions are geographic location, exchange volatility, political stability and government policies.