Demanding Supply or Supplying Demand? An Analysis of ASEAN Economic Community-Building (1977-2015)

International Journal of Research and Innovation in Social Science (IJRISS) | Volume VI, Issue V, May 2022 | ISSN 2454–6186

Demanding Supply or Supplying Demand? An Analysis of ASEAN Economic Community-Building (1977-2015)

Jovito Jose P. Katigbak
International Studies Department, Far Eastern University

Abstract – This paper reviews ASEAN’s initiative of realizing economic integration and opens the discussion on the probability of its success using a theoretical lens espoused by Walter Mattli in his book The Logic of Regional Integration: Europe and Beyond. Due to the dichotomous nature of the traditional theoretical approaches, this study utilizes Mattli’s demand-supply approach to reconcile the role played by market factors and politics, specifically actors and institutions, for seeking deeper integration. Mattli contends that the demand condition is mainly supported by market players and big businesses with larger economic interests while the supply condition is provided by an ‘undisputed leader’ and “commitment institutions”. He underscored that the combination of these two sets of conditions will mainly contribute to a successful regional integration process. However, this paper argues that ASEAN’s inability to satisfy both conditions does not automatically translate to the region’s eventual failure in seeking deeper levels of integration.

Keywords: ASEAN Economic Community, ASEAN affairs, political economy, regional governance, regional integration

I.INTRODUCTION

With its launching on 31 December 2015, the ASEAN Economic Community (AEC) has set off more discussions and debates in the national and international arenas due to the massive economic gains it offers to the ASEAN Member States (AMS) and to the rest of the world. Having the seventh largest global economy with a collective gross domestic product (GDP) of over USD3.2 trillion in 2019, and with a market of almost 656 million people, mainly young, working population, ASEAN has certainly gained the attention and interests of states, economic blocs, market players, foreign businesses, and foreign investors.1 Given the global economic slowdown and China’s ‘new normal’ level of growth, the present focus on Southeast Asia as a regional trade and investment bright spot has been augmented. Hence, the progress and success of an AEC carries major implications not only to the AMS, but also to other key actors and players outside the regional grouping.
Envisaged by the AEC Blueprint 2007 as the deadline, 2015 was instead viewed as a milestone due to a variety of policy, sectoral, and governance issues that are yet to be resolved.2 While the average of eliminated tariffs across ASEAN stands at almost 96 percent, other impediments such as non-tariff barriers, highly restrictive services trade, outdated foreign investment laws, and stringent labor mobility regulations

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