Inter and Intra Regional Foreign Direct Investment: The South Asian Outlook

Recent decades have witnessed a growing trend towards regional economic integration in the form of regional blocs. Experience of EU, NAFTA and ASEAN countries have shown that economic integration has played a very important role in promoting inter as well as intra regional investment in these regions. But SAARC remains an exception. SAARC was established in 1985 but till now no achievement has been visible in terms of investment promotion. The regional investment climate is far from satisfactory. SAARC could not exploit the benefit of regional bloc in promoting inter and intra regional investment flows. Problem in SAARC countries is more political than economic. The objective of present paper is to analyse FDI trends in SAARC countries and to find out the challenges that restrict this region to tap its potential.