Economic Integration and Development

Economic Integration and Development

Has Regionalism Delivered for Developing Countries?

Mordechai E. Kreinin and Michael G. Plummer

Mordechai Kreinin and Michael Plummer consider the implications of the emerging global trend of economic regionalism for developing countries. The analysis focuses on the trade and investment effects of integration in developed countries on developing countries, as well as the ramifications of regional integration in the latter. After an extensive review of the theoretical and empirical literature pertinent to the economics of regionalism, the book considers the ex-post trade and direct-foreign-investment effects of the Single Market Program in Europe and NAFTA, followed by chapters on ASEAN and economic integration in Latin America, primarily MERCOSUR.

Chapter 6: ASEAN Economic Cooperation: Real and Monetary

Mordechai E. Kreinin and Michael G. Plummer

Subjects: development studies, development economics, economics and finance, development economics, international economics

Extract

INTRODUCTION The Association of Southeast Asian Nations (ASEAN) is in part an economic accord spurred by political considerations. ASEAN was founded in response to the threat of communist expansion in the Mekong area. As the regional political situation began to stabilize with the withdrawal of Vietnamese troops from Cambodia and the launching of economic reform in that country in 1986, the policy agenda became increasingly focused on economic issues. ASEAN countries are extremely diverse in terms of economic structure, stage of development, political orientation, factor endowments, culture, history and religion (see Table 6.1). In such a setting, economic cooperation is not easy. Attempts at economic integration were first undertaken in the mid-1970s at the first two ASEAN summits. But because of mutual suspicions that existed between individual pairs of countries – Indonesia’s fear (founded or not) of Singapore’s intentions to dominate its huge market; Indonesia and Malaysia’s dispute over geography; and the dispute between the Philippines and Malaysia over the regions of Sabah and Sarawak on the island of Borneo – very little was accomplished. Even the institutional structure of ASEAN was designed to avoid too much integration. The ASEAN secretariat comprised officials who were seconded on a short-term basis from national ministries, ensuring that they take a national – rather than regional – perspective, it had no technical capabilities and its functions were minimal. Even the secretary general of ASEAN held the title of ‘Secretary-General of the ASEAN Secretariat’ rather than ‘Secretary General of ASEAN’, to minimize the position’s importance. Beginning with the...

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