International co-operation among nations is mainly dictated by economic, historical, political, social, cultural, religious, and geographic factors. This chapter establishes the theoretical link between the two theories in the developed and developing economic blocs. It contains a comparative review of empirical findings. Regionalised foreign direct investment (FDI) is a strategic response of firms coping with changes in relative competitiveness, locational advantages and organisational forms brought about through the realignment of tariffs, increase in market size and market growth after the formation of a customs union. Regionalism is, therefore, supposed to lead to three major integration effects namely, tariff-discrimination, market size and market growth which, in their individual and collective capacities have implications for the theory of international production. There are four types of investment responses. These are, defensive import-substituting, reorganisational, offensive import-substituting and rationalisation investments. Customs unions among developing countries have been put forward as a strategy to strengthen industries in developing countries.