Regional Integration and Capital Mobility in the World Economy: Experiences of the European Union, NAFTA and AFTA

Abstract

The paper discusses the relationship between regional integration and capital mobility in the world economy. The experiences of the EU, NAFTA and AFTA are used to support the thesis that the level of advancement of an international integration process influences capital movement into the integrated area and among the member states. Nevert heless, the typical time sequence of liberalization of markets within an integrated area changed in the 90ies which might be related to globalization processes. Even in less developed countries, capital movement in the form of FDI is liberalized simultaneously to the liberalization of goods movement. Intensive intra-grouping FDI flows show that economic interdependence of member states is increasing. This process is observed not only in the most advanced grouping, i.e. the EU, but also in NAFTA and AFTA.