Regional integration has been very low in South Asia (SA). Although there exists immense potential for economic integration in the region, intra-regional trade and intra-regional direct investment among the countries of SA have not reached to their expected level. This study focuses mainly on various aspects of intra-regional trade and FDI in the region. In order to see the impact of economic integration on intra-regional trade and intra-regional FDI in South Asia, an empirical study has been

more »

... nducted later using two sets of time series panel data ranging from 1990 until 2012 by estimating two separate equations. In this study, multilateral trade agreements and bilateral investment treaties are used as proxy for economic integration. The empirical findings suggest that South Asian Free Trade Area (SAFTA) is positively associated with both intra-regional trade and intra-regional FDI. The Asia Pacific Trade Agreement (APTA) dummy is positively associated with intra-regional trade only. However, none of the bilateral investment treaties has appeared to be a significant impacting factor of intra-regional FDI flow in South Asia. The study suggests that goal-oriented policies and strong political commitment towards economic integration are needed in the region.