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Regional Economic Integration and FDI in South Asia - Prospects and Problems

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  • Aradhna Aggarwal

    (Indian Council for Research on International Economic Relations)

Abstract

The slow progress and modest achievements of regional integration in South Asia have generated a huge amount of skepticism about its role as an effective strategy of growth. The present study, however, argues that there is need to forge deeper integration within the region. It examines the prospects and problems of serious fiscal consolidation within the area. Essentially, it looks at the effect of deepened regionalism on investment flows. It argues that regional integration has the potential to promote intra and extra regional FDI flows and economic development in individual countries of the region. This will pave the way for the most efficient use of the region's resources through additional economies of scale, value addition, employment and diffusion of technology. A number of challenges remain. Structural weaknesses, institutional bottlenecks, political movements, narrow nationalism and mutual mistrust are some of the factors that explain the failure of the region to exploit possibilities. Paradoxically, the problems themselves provide strong motivation for strengthening cooperation. It is only through more intensive collaboration that these complexities can be addressed and resolved.

Suggested Citation

  • Aradhna Aggarwal, 2008. "Regional Economic Integration and FDI in South Asia - Prospects and Problems," Macroeconomics Working Papers 22141, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:macroe:22141
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    2. Prema-chandra Athukorala, 2014. "Intra-regional FDI and Economic Integration in South Asia," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 15(1), pages 1-35, March.
    3. Ansari, Nasim & Khan, Tamanna, 2011. "FDI and regional economic integration in SAARC region: problems and prospects," MPRA Paper 32365, University Library of Munich, Germany.
    4. Prema-chandra Athukorala, 2013. "Intra-Regional FDI and Economic Integration in South Asia: Trends, Patterns and Prospects," Departmental Working Papers 2013-05, The Australian National University, Arndt-Corden Department of Economics.
    5. Mohammad Zillur Rahman, 2011. "An Empirical Study on the Relationship between Foreign Investment and International Trade in Bangladesh," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 2(2), pages 33-39, July.
    6. Antra Bhatt & Manas Puri & Andrea Appolloni, 2012. "SEZ Proliferation in India: Are the Objectives Being Realized?," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 19(1), pages 79-88, September.
    7. Kumar, Rajiv & Singh, Manjeeta, 2009. "India’s Role in South Asia Trade and Investment Integration," Working Papers on Regional Economic Integration 32, Asian Development Bank.
    8. Gould, David M. & Tan, Congyan & Emamgholi, Amir S. Sadeghi, 2013. "Attracting foreign direct investment : what can South Asia's lack of success teach other developing countries ?," Policy Research Working Paper Series 6696, The World Bank.
    9. Jihad Ait Soussane & Mohamed Yassine Fakhouri & Ayoub Sabir Almaslouhi & Zahra Mansouri, . "Does language affect the location choice of developing-economy MNEs? The case of Moroccan outward FDI," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    10. World Bank, 2013. "Trends and Determinants of Foreign Direct Investment in South Asia," World Bank Publications - Reports 16522, The World Bank Group.
    11. Manu Bhaskaran Asian Development Bank, 2009. "The Impact of the Global Economic Slowdown on South Asia," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 1(2), pages 159-239, May.

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