Different countries throughout the world have implemented strategies and laws made to entice international direct investments.

To examine the suitableness regarding the Arabian Gulf being a destination for international direct investment, one must evaluate whether or not the Arab gulf countries provide the necessary and sufficient conditions to encourage FDIs. One of many important criterion is governmental security. Just how do we assess a country or perhaps a region's security? Governmental stability depends up to a significant extent on the content of residents. People of GCC countries have actually a good amount of opportunities to help them achieve their dreams and convert them into realities, making many of them content and grateful. Additionally, worldwide indicators of political stability reveal that there's been no major political unrest in in these countries, plus the occurrence of such a possibility is highly unlikely given the strong political determination plus the farsightedness of the leadership in these counties especially in dealing with political crises. Furthermore, high rates of corruption could be extremely detrimental to international investments as potential investors fear risks such as the blockages of fund transfers and expropriations. Nonetheless, when it comes to Gulf, economists in a study that compared 200 counties classified the gulf countries as being a low risk in both categories. Indeed, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely testify that a few corruption indexes concur that the Gulf countries is enhancing year by year in eliminating corruption.

The volatility regarding the exchange prices is one thing investors simply take into account seriously as the unpredictability of currency exchange price changes could have a visible impact on the profitability. The currencies of gulf counties have all been pegged to the US 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 pegged exchange price as an important seduction for the inflow of FDI in to the country as investors do not need to be worried about time and money spent manging the foreign currency instability. Another crucial advantage that the gulf has is its geographic location, located on the crossroads of Europe, Asia, and Africa, the region functions as a gateway towards the quickly growing Middle East market.

Nations around the globe implement various schemes and enact legislations to attract international direct investments. Some countries for instance the GCC countries are progressively adopting pliable regulations, while others have cheaper labour costs website as their comparative advantage. Some great benefits of FDI are, needless to say, mutual, as if the multinational business finds reduced labour expenses, it is able to reduce costs. In addition, in the event that host state can give better tariffs and savings, business could diversify its markets through a subsidiary branch. On the other hand, the country should be able to grow its economy, cultivate human capital, increase job opportunities, and offer access to knowledge, technology, and abilities. Therefore, economists argue, that oftentimes, FDI has generated effectiveness by transferring technology and know-how towards the host country. Nevertheless, investors look at a many aspects before making a decision to invest in new market, but one of the significant factors which they give consideration to determinants of investment decisions are geographic location, exchange volatility, governmental security and government policies.