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 This paper contributes to the literature dealing with the relationship between Integration Theory and the FDI, by analysing  the Euro-Mediterranean Model. This research starts with a simple hypothesis that the Southern Mediterranean (SOM) countries have missed the extraordinary surge of private international investment in recent years. This situation has led to a correlation between many factors and the level of direct foreign investment flows . Finally, the results identify a cluster of policy initiatives that could create an economic environment that supports and increases private domestic and international investment, and points out the quality of institutions  in a broad sense as a major determinant of inward FDI in the region. Key words: Foreign direct investment, Economic integration, investment climate, Southern mediterranean countries, EU.