ASEAN Economic Community: A Case Study of Failed Economic Integration

In 2015, the ASEAN 10 countries launched their economic integration effort called the ASEAN Economic Community (AEC). The purpose of this paper is to assess the effect of that integration four years after its implementation. We used the percentage change of the GDP and percentage change of export volume from 2005 to 2018 as the data. The study divided the data into two periods; ten years before integration and 4 years after integration. In the post-integration period, we are limited to four years because only four years had passed since the AEC integration in 2005. The secondary data was extracted from the IMF’s World Economic Outlook Report 2018. The paper employed series of tests to verify the significance of changes in GDP and export growth. The T test for pre- and post-integration shows that there was no significant difference in the GDP growth (p = 0.7090), but there was significant reduction in export growth (p = 0.0047). For the ASEAN countries, there was a net loss of -0.88 ± 1.36 percentage points in the GDP growth and -1.70 ± 4.33 percentage point in export growth. We concluded that the AEC integration created a net loss for the ASEAN countries. We identified two countries who sustained significant loss in the annual GDP growth: Malaysia (T = 1.98; p = 0.0198), and Singapore (T = -2.98; p = 0.0004). No country experienced significant gain in the GDP growth. Statistical test for export growth showed that Malaysia had significant gain in export growth while four countries had significant loss: Brunei (p = 0.0335 ), Laos (p = 0.0000 ), Myanmar (p = 0.0000 ), and Singapore (p = 0.0065).