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Possible dynamic effects of ASEAN/AFTA accession for the new member countries

journal contribution
posted on 2023-06-07, 23:49 authored by Emiko Fukase, L. Alan WintersL. Alan Winters
We discuss the possible dynamic benefits of economic integration for the new members of ASEAN. Direct evidence on regional integration and growth is weak, but three indirect channels are possible. Openness increases access to foreign knowledge, which could help productivity growth. Trade liberalisation is likely to stimulate investment and might promote the integration of the regional production network. Binding liberalisation under AFTA would help `lock-in¿ and accelerate liberal economic reforms. These gains are not automatic, however. Discriminatory liberalisation will switch imports from sources with high stocks of knowledge towards ASEAN countries, which have lower stocks, and so may lower productivity growth. We term this `dynamic¿ trade diversion. In addition, local absorptive capabilities must be developed to benefit fully from technology transfer. Finally, we recommend extending AFTA commitments on an MFN basis in order to avoid static and dynamic trade diversions.

History

Publication status

  • Published

Journal

World Economy

ISSN

0378-5920

Publisher

Blackwell Publishing

Issue

6

Volume

26

Page range

853-872

Pages

20.0

Department affiliated with

  • Economics Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2012-02-06

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