The paper 'Foreign Direct Investment ' is a great example of a Macro and Microeconomics Case Study. The United Arab Emirates has a strong bilateral relationship based on a joint commitment to the security and stability of the Gulf region. The economy of the United Arab Emirates is built on oil and gas reserves. This mineral resource places the UAE as the best economic position globally. The UAE is best located as a commercial and a business hub that holds one of the busiest man-made ports, Jebel Ali (Global Investment & Business Center: USA, 2006).
Foreign Direct Investment (FDI) places the UAE at a higher position economically since it accounts for $2.3 billion in 2014, in revenue based on foreign investment. Many companies around the world direct their investments in the UAE due to significant economic growth (Global Investment & Business Center: USA, 2006). The country’ s GDP stands at 1, 093 billion, where 69 % was contributed from the nonoil sector (Appendix). The motive behind the usage of FDI is profound. This section, therefore, seeks to present theories that back the need the motive behind the consolidation of FDI by various MNE, while drawing specific examples from Dubai. Emaar Property PJSC Established in 1997, the company is a Public Joint Stock Company listed under the Dubai Financial Market.
A developer in integrated master-planned communities, where it has seen the significant transformation of the real estate sector in Dubai. Its business strategy is aimed at replicating the Dubai business model and leveraging execution capabilities and competitiveness in project management, distribution, and design. Emaar Property PJSC is a global company that offers premier lifestyles. Its subsequent investment in Dubai functions with a number of subsidiaries namely; Emaar Mall Group, Emaar Investment holdings, Emaar Hotels and Resorts, Amlak Finance among others.
Evidently, it has successfully launched a number of projects namely Mira Oasis in Reem, Vida Residence, Boulevard Point, Samara villas in Arabian Ranches, and Mulberry at Park Heights. As opposed to other oil-producing countries in UAE, Dubai does not produce oil. As such, it was compelled to create preferred investment grounds such that investors could be attracted to Dubai. In this respect, it offers a number of incentives for FDI companies.
The country’ s new Airport Free Zone and Jebel Ali free zone offer all the advantages available than any Emirati company which follows these additions; Renewable 15 years guarantee of no government taxation 100 % foreign control and ownership Flexible investment options Full recruitment and administrative support Efficient distribution and transport facilities Its joint investment strategy took advantage of the recent buoyancy in Dubai’ s real estate market by developing new iconic projects. Evidently, its motifs to invest in Dubai are attuned to the internalization theory, which upholds low entry modes as a preferred mode of operation in the foreign market.
The preference of FDI is preferred in cases when establishing facilities overseas when the cost incurred in the licensing and exporting are higher than the cost of internal transactions (Burgel and Murray 1998; Buckley and Casson, 1976; Ekeledo and Sivakumar, 2004). As such, Emaar Property PJSC sought to establish its regional presence so as to compete with the present local players in the real estate industry.
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