The Relationship between Economic Integration and Foreign Direct Investment among ECO Countries

In recent years, regional integration and economic convergence has lead to rapid and profound changes in patterns of the global economic growth. On the other hands, unfair distribution of the economic integration benefits has prevented economic cooperation in many developing countries. A solution to avoid this failure is attracted the foreign direct investment (FDI). Therefore, we have used generalized gravity model by panel data method. The aim of this paper is to study the influence of Economic integration on foreign direct investment among the ECO countries with utilize of panel data during 1997-2010. The results show that 55% of the dependent variables have explained by the independent variables in the model and convergence variable is positive and significant estimates in the model. So, there is a direct and positive correlation between the volume of foreign direct investment and economic integration.