The Association of Southeast Asian Nations (ASEAN) is a regional body composed of ten Southeast Asian countries. The original members Indonesia, Malaysia, Philippines, Singapore and Thailand signed the ASEAN Declaration in 1967; they were later joined by Brunei Darussalam in 1984, Vietnam in 1995, Lao PDR (People’s Democratic Republic) (Laos) and Myanmar (Burma) in 1997, and Cambodia in 1999. The ASEAN Declaration sets out the aims and purposes of the Association, and all 10 member-states were required to sign it in order to become a member of the organization. The Declaration sought to increase integration and cooperation in the social and cultural areas; security and politics; and the economic arena.
In this paper we study the economic effects of economic integration in the ASEAN countries. We consider eight economic variables: GDP growth, GNI per capita, labor force participation, inflation, foreign direct investment, current account balance, trade as a percentage of GDP, and intra-ASEAN trade as a percentage of total trade. We analyze movements in these variables in the short run (five years before joining ASEAN against the five years after joining) and also in the long run (the 8-year period 2000-2008).
We conduct statistical analyses to show the effects of ASEAN economic integration. We compare the performance of the ASEAN countries with that of the world, a control group (consisting of similar countries), and another free trade area (Mercosur).
Preliminary results suggest that in the short run, ASEAN integration has led to an increase in trade as a percentage of GDP in all member countries. The evidence on other variables in the short run is mixed. Over the longer-term, however, the effects of ASEAN integration appear to be clearer: In six of the seven variables tested (in the areas of income, employment, capital flows and trade), the performance of the ASEAN countries was significantly better than that of at least two of the three comparison groups. In the case of inflation, ASEAN countries did experience lower levels (though not at statistically significant levels) than those experienced by the control group and Mercosur. We conclude with lessons from the ASEAN experience for similar integration efforts elsewhere in the world.