MODALITIES FOR ASEAN ECONOMIC INTEGRATION: RETROSPECT AND GOING FORWARD

Abstract

The stages and economic effects of economic integration in the theoretical literature draws from the empirical integration experiences in Europe and may not be entirely suited to developing country groupings. Economically, ASEAN comprises largely middle and low income countries with priority on national and economic development, emphasizing attracting investment and technological resources and globally competitiveness. ASEAN and the ASEAN Economic Community (AEC) is characterized as a region with wide geographic expanse, diverse economic development levels and pursuing economic integration led by its leadership rather than the private sector. Economic integration has proceeded on two simultaneous fronts — the market-driven proliferation of regional production networks and value chains and the FTA-driven trade and investment facilitation and liberalization. Economic cooperation and integration has been pursued with increasing intensity since the late 1970s. Much has been achieved as seen in the growing density of movements of goods, services, capital and investments and movements of labor and people well as schemes for closer and deeper cooperation. The still-incomplete AEC will be declared on 31 December 2015. But there is still much “work in progress”. The AEC Blueprint 2025 highlights the priorities for the AEC for the next decade, eschewing deeper integration through customs union (CU) or common market but taking due consideration of the challenges from globalization and digitization and the clarion call for inclusive and sustainable development.