A Review of ECO Performance with Emphasis on FDI
In: Proceedings of the Conference on Human and Economic Resources
The ECO (Formerly Regional Cooperation for Development=RCD) was established in 1985 as a trilateral organization of Iran, Pakistan and Turkey to promote multi dimensional regional cooperation to create conditions for sustained socioeconomic growth in the Member States. Following the amendment in the Treaty of Izmir (as the legal framework for the RCD), ECO was fully launched in early 1991. In 1992, the Organization was expanded to include seven new members, namely: Afghanistan, Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. The date of the Organization’s expansion to its present position, 28th November, is being observed as the ECO Day. Over the past 13 years the member states have been collaborating to accelerate the pace of regional development through their common endeavors. Besides cultural and historical interdependence, they have been able to use the existing infrastructural and business links to strengthen their major economic decisions. ECO has started several projects in priority sectors of its cooperation including energy, trade, transportation, agriculture and drug control. In this study, we evaluate the performance of ECO with emphasis on Foreign Direct Investment (FDI) and propose the appropriate policies for its future. Despite of this reality that ECO members have great similarities, but they are politically disaggregated. We try to consider economic and political factors simultaneously. Based on formal data in 2004, ECO members had over than 380 million people (almost 6% of world population) that mean a potential market with EU market size. However, the per capita GDP in $US was $1548 that constituted about one-fourth of world average. Also, the unemployment rate in the region was relatively high (5.8%). This trend may be worsening because the average population growth rate (1.7%) is higher than world average. On the other hand, total FDI in the ECO countries was 9 billion dollars in 2004(only 1.4% of total FDI in the world). So, to appraisal the FDI trends in the ECO countries, we need to consider the main factors affecting FDI. Some of these factors are per capita GDP, exchange rate, openness ratio, inflation rate, external debt and ICRG risk factor. We will apply the econometric methods (Generalized Least Squares +fixed or random effects) with panel data over the 1992-2005 period. In this regard, the related tests including unit root test, Hausman test, Normality test… will be provided. It is expected that increases in per capita GDP, openness ratio and exchange rate(as devaluation form) will raise FDI, but inflation rate, accumulated external debt ,economic and political risks will decrease the FDI in the region. Based on our conclusions, ECO members can benefit from their different relative advantages including large market for own and foreigners, tourism, historical and cultural linkages, idle capacities(including young and unemployed people) and various natural resources(mineral and non-mineral resources); and reach to sustainable development if they manage their possibilities and potentials; and provide the context to attract FDI without considering some dilemmatic political or religious resistances and pressures.
|This chapter was published in: ||This item is provided by Izmir University of Economics in its series Papers of the Annual IUE-SUNY Cortland Conference in Economics with number
200622.||Handle:|| RePEc:izm:prcdng:200622||Contact details of provider:|| Fax: (90) 232 279 2626|
Web page: http://eco.ieu.edu.tr
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shah, Anwar & Slemrod, Joel, 1991. "Do Taxes Matter for Foreign Direct Investment?," World Bank Economic Review, World Bank Group, vol. 5(3), pages 473-491, September.
- Caves, Richard E, 1971. "International Corporations: The Industrial Economics of Foreign Investment," Economica, London School of Economics and Political Science, vol. 38(149), pages 1-27, February.
- Tadashi Yamada & Tetsuji Yamada, 1996. "Ec Integration And Japanese Foreign Direct Investment In The Ec," Contemporary Economic Policy, Western Economic Association International, vol. 14(1), pages 48-57, 01.
- Helpman, Elhanan, 1984.
"A Simple Theory of International Trade with Multinational Corporations,"
Journal of Political Economy,
University of Chicago Press, vol. 92(3), pages 451-471, June.
- Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Scholarly Articles 3445092, Harvard University Department of Economics.
- World Bank, 2002. "World Development Indicators 2002," World Bank Publications, The World Bank, number 13921, September.
- John H. Dunning, 1997. "The European Internal Market Programme and Inbound Foreign Direct Investment," Journal of Common Market Studies, Wiley Blackwell, vol. 35(1), pages 1-30, 03.
- John H. Dunning, 1997. "The European Internal Market Programme and Inbound Foreign Direct Investment," Journal of Common Market Studies, Wiley Blackwell, vol. 35(2), pages 189-223, 06. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:izm:prcdng:200622. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ayla Ogus Binatli)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.