Kiel Working Papers, Kiel Institute for World Economics
No 1418:
Regional Integration and FDI in Emerging Markets
Julia Kubny, Florian Mölders and Peter Nunnenkamp
Abstract: Regional integration is often considered a means to
improve member countries’ attractiveness to foreign direct investment
(FDI). But regional integration agreements (RIAs) as well as FDI are too
diverse to allow for generalized verdicts. Our case studies on Mercosur in
Latin America, ASEAN and SAARC in Asia, and SADC in sub-Saharan Africa
caution against high expectations in several respects. First,
country-specific factors were often more important as a stimulus to FDI
than regional integration per se. Second, member countries are unlikely to
equally share RIA-induced FDI inflows, even though the larger and richer
members are not necessarily the winners taking all. Third, the regional
heavyweights Brazil, China, India, and the Rep. of South Africa have played
a minor role so far in fostering effective regional integration through
outward FDI
Keywords: foreign direct investment, regional integration, Mercosur, ASEAN, SAARC, SADC; (follow links to similar papers)
JEL-Codes: F15,; F23; (follow links to similar papers)
36 pages, April 2008
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