The Impacts of Regional and Global Integration on Foreign Direct Investment Inflow- Case Study of Persian Gulf Countries

The trade and investment relations have expanded substantially in globalization process among most developed and developing countries. The development has implemented in form of regional and global integrations affecting differently economies worldwide. The objective of this paper is to explore the effect of such integration on foreign direct investment (FDI) inflows in where countries where locate in the Persian Gulf, which are mostly oil producing. To this end, a panel econometric model has been specified and estimated using cross-section data of the selected countries in the region during 2001-2008. The empirical results indicate that regional trade integration leads the countries to increase FDI inflows, while they are faced with the inverse effects of discrepancies in culture and language on attracting FDI.