2 - ASEAN diversity, economic growth and internationalisation

Summary

ASEAN's economic diversity

ASEAN diversity has often been cited to explain difficulties in reaching consensus on the speed and depth of ASEAN economic integration. Table 2.1 below highlights the economic diversity as proxied by population size, GDP, per capita GDP and per capita GNIPPP, trade openness and FDI dependence as of 2012. Vast diffierences continue to exist notwithstanding decades of economic cooperation and integration. Singapore and Brunei have high per capita incomes that better many in the Organisation for Economic Cooperation and Development (OECD), while Cambodia, Laos and Myanmar are the least developed economies. Indonesia is ASEAN's largest economy, followed by Thailand and Malaysia, while, in comparison, Brunei, Cambodia, Laos and Myanmar are small economies. The diversities are reflected in the different production and export structures and commercial policies.

All ASEAN countries have become highly open trade economies, although there remains wide intercountry variation, with Singapore having the highest trade/GDP ratio and Myanmar and Indonesia the lowest. Generally smaller economies are more trade dependent than the very large ones. A high trade/GDP ratio may reflect competitiveness in the inter national market place, but also renders the economy highly vulnerable to business cycle fluctuations in international demand. There are also wide intercountry differences in investment regimes. The inward FDI stock is very unevenly spread among ASEAN countries, with Singapore the major recipient of inward FDI into manufacturing and services, while CLMV accounted for only a minor share of total ASEAN inward FDI stock.

Table 2.2 shows the wide diversity in competitiveness as proxied by rankings in the World Bank's 2014 ‘ease of doing business’ index. Generally, Singapore stands at the top while CLMV is at the other end of the competitiveness spectrum. The rankings of the specific components of the index give an indication of the specific areas in which individual countries need to improve on their competitiveness.