ASEAN: Regional Trends in Economic Integration, Export ... - USITC

Participating countries also gain additional long-term economic benefits through
increased investment and harmonization of economic and monetary policies.
Studies of the economic integration process have generally focused on intraregional trade
and investment flows, macroeconomic interdependence, and strong regional economic
growth as indicators of increasingly integrated economies. 6 The USITC, in an earlier
study of economic integration in East Asia, examined how economic policies and
investment patterns in the region contributed to the process of merging the markets for
goods, services, capital, and labor in East Asia. 7 The study highlighted the gradual
convergence of economic policies, reductions in trade barriers, and improvements in
infrastructure and intellectual property protection as factors facilitating economic
integration among the regional economies.
The Asian Development Bank (ADB) has developed a number of specific quantitative
indicators to gauge economic integration. These indicators include growth in regional
gross domestic product (GDP) among member economies and changes in income gaps,
intraregional trade and investment shares, production correlation (as a measure of
macroeconomic linkages), correlation of equity prices, and interregional tourism flows. 8
This report calculates two measures that are commonly used to show trends in regional
interdependence. 9 The intraregional trade share shows a region’s trade with itself as a
share of the region’s total trade, which in this case is the share of ASEAN’s total trade
that is intra-ASEAN. The other measure is the intraregional trade intensity, which shows
the intensity with which a region trades with itself compared with its trade with the
world. 10 It is calculated by dividing the share of intraregional trade in its overall trade by
the share of its trade in world trade. If the index measures 1, there is no regional bias in
trade; if it is more than 1, the region’s share of trade with itself is greater than would be
expected given its importance in world trade. An increase in the index over time indicates
that regional trade is increasing more rapidly than the region’s share in global trade.
Unlike the intraregional trade share indicator, trade intensity does not suffer from a size
bias; that is, it does not rise simply because the region’s relative weight in the world
economy is increasing.
Export Competitiveness
USTR requested that the USITC analyze the export competitiveness of the profiled
industries in ASEAN member countries. In referring to competitiveness as a concept,
theorists distinguish between “competitiveness” at the national level (competitive
6 Kim, Lee, and Park, “The Ties that Bind Asia, Europe, and the United States,” February 2010, 1. Note
that economic growth among regional economies is considered an important indicator of regional integration
due to the association between trade openness and growth.
7 USITC, East Asia, 1993. The countries included in this investigation were Singapore, China, South
Korea, the Philippines, Taiwan, Hong Kong, Indonesia, Malaysia, and Thailand. The discussion of economic
integration in this investigation was summarized in Pierson, “East Asia: Regional Economic Integration and
Implications for the United States,” 1994, 1168–85.
8 Capannelli, Lee, and Petri, Developing Indicators for Regional Economic Integration and Cooperation,
September 2009, 2.
9 For example, see Capannelli, Lee, and Petri, “Developing Indicators for Regional Economic Integration
and Cooperation,” September 2009, 5; Plummer and Chia, “Assessing the Economics of the ASEAN
Economic Community: Introduction,” 2009, 8; and ADB, Emerging Asian Regionalism, 2008, 40–41.
10 For more information about intraregional trade intensities, see ESCAP, “Trade Statistics in
Policymaking,” n.d., 52–53; Capannelli, Lee, and Petri, “Developing Indicators for Regional Economic
Integration and Cooperation,” September 2009, 6.
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