The Effect of Economic Integration on FDI "The Empirical study of D8 countries"

Abstract

Toward the different economic integration and Commercial regional arrangements, which are the small scale of globalization, could relative advantage and put on the new opportunity on the national economies. These fact causes to the Developing countries open their markets to attract FDI and reduce their restriction on tariff and non tariff, which can increase international trading at the same time. With this important item, this study inquiry the effect of economic integration and globalization on the FDI, by specifying gravity model and panel data approach, for D8 member, during 2001 to 2011. Our Gravity model estimate show: the direct integration between member states D8 has positive and significant effect on foreign direct investment inflow. JEL Classification: F13, F23 Key Word: Economic Integration, Foreign Direct Investment, Gravity Model. 1-Introduction Foreign investing capital and multinational companies are two aspects of a great change that it formed universal economic union and this variable is most important feature of international economic. Ever-increasing development of economic organizations-local economic-combining financial markets-financial union-release interchange of goods and capital transformations are some variables of universal economic. Rather than formed international markets, universal economic established a competitive situation that only efficient and powerful companies can remain with it. It is necessary to equipped different countries of world, especially development countries. So study the equipment and benefits of economic and understanding their challenges and problems can provide an accurate stimulation field in this discussion. In addition, different economical unions and localizations as appropriate tools, can clarify 1 MA Graduated of economics, Iran, Azad University, Khomeinishahr Branch, 2 MA of Economics in Chamran University, Shamohamadi_fa1363@yahoo.com 3 MA in Banking Management, kiani1362@yahoo.com 4 MA Graduated of economics, Iran, Azad University, Khomeinishahr Branch International Journal of Academic Research in Progressive Education and Development July 2013, Vol. 2, No. 3