The GCC countries are earnestly adopting policies to bring in foreign investments.

Countries around the world implement different schemes and enact legislations to attract foreign direct investments. Some countries like the GCC countries are increasingly implementing pliable regulations, while others have actually reduced labour costs as their comparative advantage. The advantages of FDI are, of course, shared, as if the international corporation discovers reduced labour costs, it will likely be in a position to reduce costs. In addition, if the host state can grant better tariffs and savings, the business enterprise could diversify its markets through a subsidiary branch. Having said that, the state will be able to grow its economy, develop human capital, increase job opportunities, and provide usage of knowledge, technology, and abilities. Therefore, economists argue, that in many cases, FDI has led to effectiveness by transmitting technology and know-how to the country. However, investors look at a myriad of factors before making a decision to move in new market, but among the significant factors which they think about determinants of investment decisions are location, exchange fluctuations, governmental security and governmental policies.

The volatility associated with currency rates is something investors simply take seriously since the unpredictability of exchange rate fluctuations might have a direct effect on their profitability. The currencies of gulf counties have all been pegged to the US dollar from the mid 1990s and early 2000s, . and investors such Farhad Azima in Ras Al Khaimah and Oussama el-Omari in Ras Al Khaimah would likely see the pegged exchange rate as an essential seduction for the inflow of FDI in to the country as investors don't need certainly to worry about time and money spent handling the foreign currency risk. Another important benefit that the gulf has is its geographical position, situated at the intersection of three continents, the region functions as a gateway to the quickly raising Middle East market.

To look at the viability of the Arabian Gulf being a location for foreign direct investment, one must assess whether the Arab gulf countries give you the necessary and adequate conditions to encourage FDIs. Among the consequential factors is governmental stability. How can we evaluate a country or perhaps a area's stability? Political security will depend on to a large degree on the content of inhabitants. Citizens of GCC countries have an abundance of opportunities to aid them attain their dreams and convert them into realities, helping to make a lot of them content and happy. Additionally, global indicators of governmental stability unveil that there's been no major political unrest in the area, as well as the incident of such a scenario is extremely not likely given the strong governmental determination as well as the farsightedness of the leadership in these counties especially in dealing with political crises. Moreover, high rates of corruption can be extremely harmful to foreign investments as investors fear risks such as the obstructions of fund transfers and expropriations. Nonetheless, regarding Gulf, specialists in a study that compared 200 counties categorised the gulf countries as a low risk in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that several corruption indexes confirm that the Gulf countries is increasing year by year in eradicating corruption.