Stimulating Intra-regional Investment in SAARC

Raveen Ekanayake and Nipuni Perera

South Asia Economic Journal, 2015, vol. 16, issue 2_suppl, 75S-101S

Abstract: Whilst unilateral liberalization of FDI policy regimes in South Asia have made significant headway and contributed to increased FDI inflows, as a region South Asia’s success in attracting FDI, compared to other more successful trading blocs remains limited. Notably, intra-regional investment volumes remain minuscule in comparison to the already dismal level of intra-regional trade. Despite a lapse of over a decade after the implementation of SAFTA, the recent past has witnessed renewed interest in a regional investment agreement in SAARC. This article evaluates how useful a regional investment framework would be for the SAARC. The article argues that whilst a regional investment framework is critical in spurring both intra- and extra-regional FDI, it is by no means the only determinant in attracting FDI. As the experience in ASEAN suggests, in addition to a regional framework, at the country level, each SAARC member state must strive to undertake broad-based reforms to improve their individual country investment climate if they aspire to attract greater volumes of both intra- and extra-regional FDI to support its trade expansion. The article also goes on to draw lessons and best practice from the ASEAN Investment Agreement in going about designing and implementing a Regional Investment Agreement in SAARC.

Keywords: South Asia; foreign direct investment; regional cooperation; trade; capital flows (search for similar items in EconPapers)
JEL-codes: F21 F33 F36 F37 F47 G15 G28 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:soueco:v:16:y:2015:i:2_suppl:p:75s-101s

DOI: 10.1177/1391561415594731

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