Benefits for «Big» and «Small» Countries from Integration within ASEAN

Abstract

The example of ASEAN countries empirically confirms the fact that benefits for a «small» country from economic integration with a «big» country exceeds the benefits of the latter. According to the author’s methods of ranking the size of economies, «big» and «small» countries within ASEAN are determined. According to estimates, «small» countries of ASEAN are Cambodia, Laos, Myanmar, Vietnam (ASEAN-4). Singapore, Malaysia, Thailand, Philippines, Indonesia, and Brunei (ASEAN-6) are «big» countries. By the methods of B. Balassa trade effects of integration are calculated. The trade creation effect is found in three of the four «small» countries (Laos, Myanmar, Vietnam) and in four of the six «big» countries (Malaysia, Thailand, Philippines, Indonesia). When assessing the effects at the level of subgroups ASEAN-6 and ASEAN-4 the trade creation effect is more pronounced for ASEAN-4, and the trade diversion effect for both subgroups is feebly marked

Keywords

• Free trade agreement
• ASEAN
• AFTA
• «small» country
• «big» country
• trade creation effect
• trade diversion effect