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The Economic Integration of ASEAN+3

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  • Verico, Kiki

Abstract

The ASEAN wide economic cooperation under the ‘ASEAN umbrella principle’ is fitting the ASEAN’s ‘open and soft regionalism’ character. It helps ASEAN to achieve a comprehensive trade and investment integration in the short to medium-run and financial integration in the long-run. In Southeast Asia, this wide-regionalism has been reflected in the ASEAN Plus framework. Among one of them is the ASEAN+3, which covers ten ASEAN member states and three East Asian countries (China, Japan and South Korea). This paper attempts to analyze the stability and sustainability of economic integration of the ASEAN+3. It adopts the ‘inflation rate similarity among observed countries’ as a proxy variable of regional economic integration and implements a time-series analysis of Stationarity Test to observe whether inflation rate similarity is the most appropriate variable for assessing the both short and long-run economic integration of the ASEAN+3. As for the short-run economic integration, this paper implements the ECM (Error Correction Mechanism) to identify whether pair inflation rate similarity among observed countries is stable and whether it is has dynamic or static relations. As for long-run economic integration, this paper implements Cointegration Test and its result has been utilized as the benchmark to select the observed countries for a further relation analysis between inflation and exchange rate. This relation is a proxy to describe long-run trade relations of the observed countries either they do compete or complement among each other.

Suggested Citation

  • Verico, Kiki, 2013. "The Economic Integration of ASEAN+3," MPRA Paper 43801, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:43801
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    References listed on IDEAS

    as
    1. Richard E. Baldwin, 2008. "Managing The Noodle Bowl: The Fragility Of East Asian Regionalism," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 53(03), pages 449-478.
    2. Kiki Verico, 2007. "The Impact of ASEAN’s Intra Trade to FDI Inflows from Non-Member States : The Cases of Indonesia, Malaysia & Thailand 1987-2006," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 55, pages 253-281, December.
    3. Shujiro Urata, 1993. "Japanese Foreign Direct Investment and Its Effect on Foreign Trade in Asia," NBER Chapters, in: Trade and Protectionism, pages 273-304, National Bureau of Economic Research, Inc.
    4. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72, October.
    5. Fukunari KIMURA & Ayako Obashi, 2009. "International Production Networks: Comparison between China and ASEAN," Working Papers d004, Economic Research Institute for ASEAN and East Asia (ERIA).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    economic integration; inflation rate similarity; regional economic enlargement; exchange rate and trade relation; ASEAN+3;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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