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Regional Integration and Foreign Investment: The Case of Asean Countries

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Listed:
  • Emmanuel O Nwosu
  • Anthony Orji
  • Nathaniel Urama
  • Joseph I Amuka

Abstract

The importance of regional integration in stimulating foreign direct investment cannot be overemphasized. With a special focus on the ASEAN countries, this research paper investigates the role of regional integration in attracting foreign direct investment. We bring a novelty to this paper by dividing foreign direct investment into Inter-and Intra-ASEAN to see if both are determined by the same set of factors. If economic integration drives intra-ASEAN FDI we would expect such FDI to be unrelated to macroeconomic fundamentals in each country, while we would expect Extra-ASEAN FDI to be determined by macroeconomic fundamentals. We employed panel data model in the analyses and the findings show that FDI from rest of the world are determined by macroeconomic fundamentals especially market size (GDP) and exchange rate, while inter-ASEAN FDI is not significantly related to macroeconomic fundamentals but depends on previous investments in the region. This implies most investments in ASEAN from ASEAN are motivated by economic integration.

Suggested Citation

  • Emmanuel O Nwosu & Anthony Orji & Nathaniel Urama & Joseph I Amuka, 2013. "Regional Integration and Foreign Investment: The Case of Asean Countries," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(12), pages 1670-1680.
    • Handle: RePEc:asi:aeafrj:v:3:y:2013:i:12:p:1670-1680:id:1116
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    Cited by:

    1. Jonathan E. Ogbuabor & Onyinye I. Anthony-Orji & Oliver E. Ogbonna & Anthony Orji, 2019. "Regional integration and growth: New empirical evidence from WAEMU," Progress in Development Studies, , vol. 19(2), pages 123-143, April.
    2. Mazhar Hussain & Syed Zulfiqar Ali Shah, 2022. "Pre and Post Evaluation of Pakistan-Sri Lanka Free Trade Agreemen," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 27(1), pages 89-115, Jan-June.
    3. Anthony Orji & Godson Umunna Nwagu & Jonathan E. Ogbuabor & Onyinye I. Anthony-Orji, 2021. "Foreign Direct Investment and Growth Nexus: Further Evidence from Africa’s Largest Economy," Journal of Infrastructure Development, India Development Foundation, vol. 13(1), pages 65-78, June.

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