The ASEAN Economic Community: A General Equilibrium Analysis

29 Pages Posted: 25 Sep 2010 Last revised: 25 Nov 2011

Peter A. Petri

Brandeis University - Brandeis International Business School; Brandeis University - Department of Economics; East-West Center

Michael Plummer

Organization for Economic Co-Operation and Development (OECD)

Fan Zhai

China Investment Corporation

Date Written: November 21, 2010

Abstract

The ASEAN Economic Community (AEC) is the largest integration effort attempted in the developing world; if realized, it will create a single market with the free movement of goods, services, foreign direct investment and skilled labor, and freer movement of capital encompassing nearly 600 million people. The study finds that the AEC could yield benefits similar to those of the European Union, amounting to 5.3% of the region’s GDP and more than twice that if, as expected, the AEC leads to free trade agreements with key external partners. Every ASEAN member will share in these benefits. There will be mild trade and investment diversion effects, but the world as a whole will benefit from the AEC. Nevertheless, the AEC poses political challenges: the study finds that the project will imply significant structural adjustment in several ASEAN economies.

Keywords: ASEAN, ASEAN Economic Community, regional economic integration, free trade areas

JEL Classification: F12, F13, F14, F15, O2

Suggested Citation

Petri, Peter A. and Plummer, Michael and Zhai, Fan, The ASEAN Economic Community: A General Equilibrium Analysis (November 21, 2010). Available at SSRN: https://ssrn.com/abstract=1682200 or http://dx.doi.org/10.2139/ssrn.1682200

Peter A. Petri (Contact Author)

Brandeis University - Brandeis International Business School ( email )

Mailstop 32
Waltham, MA 02454-9110
United States

HOME PAGE: http://ppetri.com/

Brandeis University - Department of Economics

Waltham, MA 02454-9110
United States

HOME PAGE: http://ppetri.com/

East-West Center

1601 East-West Road
Honolulu, HI 96848
United States

HOME PAGE: http://ppetri.com/

Michael Plummer

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Fan Zhai

China Investment Corporation ( email )

New Poly Plaza, No.1 Chaoyangmen
Beidajie, Dongcheng
Beijing, 100010
China

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