Economic development and regional integration of the ASEAN member countries

Abstract

The ASEAN member countries are among the fastest growing developing countries in the world. Their high rate of growth during the past two decades and their collective efforts in world affairs have received growing international notice. The objective of this study is to examinate the extent to which economic growth resulted from regional integration among the ASEAN member countries. The study of the characteristics of the ASEAN economies, their growth performance and their experience of economic cooperation, suggests that their economic achievements mainly resulted from the effectiveness of each country's own policies. Outward orientation toward world markets was key, but it was supported by relatively efficient macroeconomic and sectoral policies. The region had relatively high intra-regional trade before the formation of ASEAN, and such trade has persisted. However, apart from Singapore's entrepot trade, it principally consists of complementary trade in primary products which have never become heavily protected. Intra-ASEAN trade In manufactures has not increased appreciably, because ASEAN has not reduced protection substantially either among the member countries alone, or among the member countries and against the rest of the world. Econometric experiments confirmed that little would be gained by a preferential arrangement, and suggested that complete intra-ASEAN trade liberalization would also not lead to a marked increase in the ratio of intra-ASEAN to total ASEAN trade. Much of such an increase would, moreover, consist of trade diversion rather than trade creation. A reduction of trade barriers within ASEAN simultaneously with world wide trade liberalization would in contrast, lead to appreciable output and trade growth for the ASEAN member countries. Show more