Toward an Asian Economic Community?

Abstract

The Asia and Pacific region has emerged as the growth pole of the world economy especially since 2000. However, in the aftermath of the 2008–2009 global financial crisis, sustaining the dynamism of Asian and Pacific economies would require a rebalancing in favor of greater domestic consumption and exploiting the potential of regional economic integration. This chapter argues that broader regional economic integration in Asia within the Comprehensive Economic Partnership of East Asia (CEPEA) framework, proposed for the Association of Southeast Asian Nations (ASEAN)+6 countries could be an engine of growth for not only the participating countries but also has the potential to enhance the welfare of the rest of the world by unleashing the synergies of Asian countries for trade creation besides making the region emerge as the third pole of the world economy alongside the North American Free Trade Agreement (NAFTA) and the European Union (EU). ASEAN members are Brunei Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Viet Nam. The +6 countries are the People’s Republic of China, Japan, Republic of Korea, Australia, New Zealand, and India. Furthermore, monetary and financial cooperation in the region has further possibilities of generating additional aggregate demand for sustaining their dynamism by efficiently intermediating between the region’s excess savings and unmet investment needs. By forming credible schemes of regional economic integration, Asia will be able to seek its due place in global economic governance and contribute to building a more democratic and multipolar world economy. Asian economic integration by increasing the interdependence of countries in the region will also ensure peace and stability.

Earlier versions of this chapter were presented as papers at the Conference on The Future of South-South Economic Relations held at The Frederick S. Pardee Centre for the Study of the Longer Range Future, Boston University, US on 24 September 2010.