Study Of Foreign Direct Investment Effect Of Regional Economic Integration

Over the last decade, the universal trend of the development of regional economic integration is that no matter what kind of economic integration organization it is , established or newly-built, their cooperation has gone far beyond the field of trade, tried to search for more extensive cooperation in other fields, especially in the field of foreign direct investment. We can see that, the importance of foreign direct investment is to the economic development of the member countries as well as the region as a whole has aroused more and more attention. So we may want to know that what influence the implementation of regional economic integration agreement will have on foreign direct investment, and through what kind of mechanism it works. These are the starting point of this article.On the basis of reviews over some related articles on the topic of regional economic integration's influence on foreign direct investment. We put forward our theoretical analysis from three aspects, namely the intra-region trade liberalization caused by regional economic integration, investment provisions of the regional economic integration agreement and dynamic effects of the regional economic integration. We closely examined the possible impacts of the above three will have on investment decisions of multinational corporations. However, different kind of multinational corporations out of different motives will react differently to regional economic integration. So in this part, we can't figure out how regional economic integration will influence the foreign direct investment flows of member countries. We leave this problem to the next part.In the section of empirical analysis, we choose two of the most successful regional economic integration organization, namely European Union and North American Free Trade Area as examples. We closely examined the effects of their establishment and development on foreign direct investment flows. The west Europe integration process include two phases, moreover, during the first phase, the year of 1973 is noteworthy in which the Great Britain became a member. Thus, we examine the effects of west Europe integration on foreign direct investment in three periods,accordingly. As for North American economic integration, we focus mainly on its influence on foreign direct investment flows of Canada and Mexico.At last, according to the empirical analysis, we put forward a analytical framework on the possible effects regional economic integration may have on foreign direct investment flows of member countries, as a supplement to the theoretical analysis.