Intra Regional Foreign Direct Investment (FDI) Prospect in South Asian Association of Regional Cooperation (SAARC) Region

Abstract

The empirical literature offers regional integration arrangements reduce trade costs among partner countries this reduction in cost not only increase trade but also act as a stimulus to increase FDI flow. South Asian Association for Regional Cooperation (SAARC) was established in 8th December 1985 with the seven South Asian countries (Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka) but after 25 years of its establishment very low level of intra regional trade ( less than 5%) and in case of FDI the major source is outward flow than intra regional flow. Despite the major difference among the member countries in different macro economic parameter there is a scope of potential for intra regional FDI inflow. In this study different research papers was presented with respect to regional trade and integration was studies. The major focus is on SAARC economic integration and FDI status. The study one other economic integration areas and FDI inflow was suggested for future research.