Regions integrate differently, and with varying modalities and arrangements. Some regions pursue a strong form of economic integration (e.g. economic community, monetary union) including regional trade agreements (RTAs) while others adopt other arrangements and structures. As of June 2014, the World Trade Organization had been notified of 379 RTAs in force.
In recent years some regions have received more FDI flows than others, contributing to sustainable development. In consequence, these regions are witnessing rising corporate activity, involving intra- and inter-company arrangements, strengthening regional integration and inter-regional connectivity. Some transnational corporations (TNCs) invest with multiple operations in different countries across an integrating region, tapping on agglomeration and complementary locational advantages within the region. They do so to better exploit economies of scale, benefit from the division of labour, and engage in contract manufacturing or other types of sourcing to achieve production efficiency and flexibility. Yet other regions, despite the existence of complementary locational advantages and the promise of a bigger regional market, are less successful at attracting FDI; and the evidence of TNCs with a regional footprint is less visible in these cases. What contributes to these differences and what policy lessons can be drawn from such a variance in regional experiences? What should be done from the business perspective to facilitate TNCs activities further across regions in order to contribute to sustainable development?
This High-level Dialogue session aimed to determine whether regional integration matters in FDI decisions. What key elements of regional integration significantly influence how TNCs operate within an integrating region in a sustainable manner? The Dialogue drew on the experiences and observations of different integrating regions.
Another key objective is to address whether and how TNCs that operate regionally can help connect companies and countries within an integrating region to achieve effective sustainable development, including inter-regionally through value chains.
Elements for the debate
- How has regional integration in different parts of the world influenced corporate investment strategies and shaped regional value chains; and how did they in turn strengthen regional integration?
- How do global/regional value chains affect and shape regional economic integration efforts?
- What mechanisms can be adopted at the multilateral level to facilitate the exchange of experience and lessons learned among regional groupings?