Intra-Regional FDI and Economic Integration in South Asia: Trends, Patterns and Prospects
AbstractThis paper examines trends and patterns of intra-regional FDI in South Asia, with a focus on the potential for integrating production processes among countries in the region through further trade and investment policy reforms. The empirical evidence pieced together from scattered sources suggests that horizontal (market seeking) FDI has continued to dominate South Asian intra-regional FDI, with a significant shift in recent years in favour of services sector activities. Vertical (efficiency seeking) FDI in the region has remained confined to a few product lines, predominately garments, and also a few industries in which the availability of specific natural resources plays an important role in the site selection decisions of firms. In other industries, including electronics and electrical goods in which global production sharing is heavily concentrated, there is no evidence of notable cross-border operations by regional firms. The limited achievement so far in fostering cross-border production sharing through vertical FDI has been the outcome of unilateral, rather than region-wide, trade and investment policy reforms.
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Bibliographic InfoPaper provided by The Australian National University, Arndt-Corden Department of Economics in its series Departmental Working Papers with number 2013-05.
Length: 40 pages
Date of creation: 2013
Date of revision:
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More information through EDIRC
South Asia; foreign direct investment; production networks; free trade agreements (FTAs);
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-27 (All new papers)
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