Regional Integration and FDI in Emerging Markets

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. 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. Terms of use: Documents in EconStor may

Do regional trade agreements stimulate FDI? Evidence for the Agadir, MERCOSUR and AFTA regions

“…However, because of the heterogeneity of initial conditions and the scope of agreements, the impact of RTAs on FDI is not determined in advance. By examining the AFTA, MERCOSUR, and SADC (Southern Africa) RTAs, Kubny, Mölders, and Nunnenkamp () found that country specific determinants are more important than regional integration to attract FDI.…”

On the Economics of Regional Powers: Comparing China, India, Brazil, and South Africa

“…This means the regional powers are thereby speeding up their catching-up process, without completely diverting foreign direct investment away from the countries in the region. Foreign direct investment is increasing in these countries too, for example, in Vietnam (Kubny, Mölders and Nunnenkamp 2008).…”

Economic Integration and Foreign Direct Investment: Review of Main Theoretical Concepts

“…The theoretical effects of trade liberalization on FDI flows remain unclear and depend on whether trade and investment are considered to be complements or substitutes. In the first case, establishment of RTAs is expected to increase vertical intraregional FDI flows due to the rising complexity of MNCs' production networks (and their creation costs), as well as to the minimum level of trade links necessary for FDI to emerge (Medvedev, 2012;Witkowska, 2001); another important factor is cost differentials (Kubny et al, 2011). Horizontal FDI inflows from countries outside the RTA may also increase because of the establishment of so-called export platforms served earlier by trade -such flows are analyzed using export-platform FDI models (Velde & Bezemer, 2006).…”

“…Investment liberalization and protection provisions within economic blocs are directly linked to decisions to undertake FDI made by MNC due to the reduced transaction costs (Kubny et al, 2011). Such rules include lifting investment restrictions (i.e.…”

“…Therefore, the results of empirical studies should be analyzed with caution. Moreover, because of problems with the correct specifications of econometric models (linked with the issues described above), case studies of selected blocs seem to be a more plausible solution (Kubny et al, 2011; United Nations Conference on Trade and Development, 2013a).…”