Working Paper

Regional Integration and FDI in Emerging Markets


  • Kubny
  • J.
  • Mölders
  • F.
  • Nunnenkamp
  • P.
Publication Date

Regional integration is often considered a means to improve member countries’ attractiveness to foreign direct investment (FDI). But regional integration agreements (RIAs) as well as FDI are too diverse to allow for generalized verdicts. Our case studies on Mercosur in Latin America, ASEAN and SAARC in Asia, and SADC in sub-Saharan Africa caution against high expectations in several respects. First, country-specific factors were often more important as a stimulus to FDI than regional integration per se. Second, member countries are unlikely to equally share RIA-induced FDI inflows, even though the larger and richer members are not necessarily the winners taking all. Third, the regional heavyweights Brazil, China, India, and the Rep. of South Africa have played a minor role so far in fostering effective regional integration through outward FDI.


JEL Classification
F15, F23

Key Words

  • ausländische Direktinvestitionen
  • foreign direct investment
  • Mercosur
  • regional integration
  • regionale Verflechtung
  • SADC