Attracting Foreign Direct Investment: What Can South Asia's Lack of Success Teach other Developing Countries?
Despite South Asian nations experiencing increased foreign direct investment (FDI) flows over the past decade by gaining a large share of cross border investments, FDI inflows in South Asian countries still remain the lowest relative to gross domestic product (GDP) among developing country regions. This paper uses an empirical model that accounts for possible trends in convergence in the ratio of FDI to GDP between countries and cross-sectional data for 78 countries from 2000 to 2011. In examining the historical patterns of South Asia’s FDI and its connection with the policy environment, policymakers can identify constraints to FDI and boost potential for broad-based growth.
Author: David M. Gould, Congyan Tan and Amir S. Sadeghi Emamgholi
Tags: South Asia, Trade Policy, FDI, GDP, Investment, Governance, Transparency, Economic Growth, Financial Sector, Regional Cooperation, Trade