Foreign Direct Investments and Economic Integration in Developing Countries: the Cases of ASEAN and MERCOSUR

It is known that membership in regional economic integrations has an important effect in determining foreign direct investments (fdi). in this study, the effect of regional economic integration on fdi was empirically analysed for asean and mercosur established by developing countries. the model constructed in this paper included a dummy variable for regional economic integrations for the 1980-2007 period and fixed effects panel data method is used. according to estimated results, membership to regional economic integrations together with other factors has increased fdi flows. with the current increasing regionalization trend, this study suggests that in order to attract higher amounts of fdi, developing countries should emphasize regional economic integration, or at least they should make trade agreements.