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

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  • Aradhna Aggarwal

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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. [Working Paper No. 218]

Suggested Citation

  • Aradhna Aggarwal, 2010. "Regional Economic Integration and FDI in South Asia : Prospects and Problems," Working Papers id:2691, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:2691
    Note: Institutional Papers
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    References listed on IDEAS

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    Cited by:

    1. World Bank, 2013. "Trends and Determinants of Foreign Direct Investment in South Asia," World Bank Other Operational Studies 16522, The World Bank.
    2. 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.
    3. 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.
    4. 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.
    5. 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.

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    Keywords

    Regional integration; South Asia; intra regional FDI; extra regional FDI; SAFTA;

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