AFTA and the investment-trade nexus in ASEAN

A study on the possible implication of the formation of the ASEAN Free Trade Area (AFTA) through foreign direct investment (FDI) flows to the region was conducted. It was revealed that the growth of FDI in AFTA is likely to result from the market enlargement factor which is achieved through continued commitment to outward oriented policies and the arbitration of effective investment which is considered the most effective given a short time. The AFTA strategy has a promising motivation to achieve international production strategies, thus, leading to better inter-regional specialisation in international production.