Perspectives from Spatial and Neoclassical Economics
Edited by Masahisa Fujita, Satoru Kumagai and Koji Nishikimi
Chapter 11: The Home Market Effect in ASEAN Countries
317 ASEAN, and today, many tariﬀs have been lowered to 0–5 percent in the ASEAN-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) countries using the Common Eﬀective Preferential Tariﬀ (CEPT) scheme. China, Korea and Japan have also signed FTA agreements with ASEAN countries. The early harvest program of the China–ASEAN FTA started on January 2004, and tariﬀ reductions for manufacturing products have been in place since July 2005. A Korea–ASEAN FTA was signed on May 2005 by Korea and the ASEAN countries except Thailand. Institutional economic integration, particularly in the form of FTAs, can be seen as a signiﬁcant factor that reduces transport costs (broadly deﬁned) among the integrated countries. Each ﬁrm makes location decisions for its factories based on its own circumstances. While the concentration of products and relocation of factories by ﬁrms may lead to substantial economic integration, economic integration also changes their circumstances and can induce further relocation. Some countries may hope to restrain the speed of economic integration to prevent the outﬂow of industries. China has a large market and hence is a signiﬁcant production site in Asia. Ishida (2006) examines competition between the ASEAN-5 countries and China, and ﬁnds that ASEAN lost export share and export growth rate in labor-intensive industries from 1995 to 2000 and in machinery industries from 2000 to 2002. Foreign direct investments (FDI) into ASEAN countries have decreased since the Asian economic crisis of 1997. In 1997, China received nearly the...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.