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Southeast Asia and the AEC, an Introduction

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Southeast Asia and the ASEAN Economic Community

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Abstract

After enumerating economic characteristics that motivate interest in the ASEAN Economic Community (AEC), this chapter provides an overview of the geography (political and physical) and history (covering early identity and a chronology of external influences, as well as the more recent impact of European colonization and Japanese occupation) of the region. It then gives a short description of the genesis of the Association of South East Asian Nations (ASEAN) and the ASEAN Economic community (AEC). Finally, there is an overview of the economies of the member nations of the AEC and the region in general, including the digital economy.

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Notes

  1. 1.

    IMF 2018, World Economic Outlook, Table 1, provides an average for ASEAN 5—the largest and slowest growing economies with the exception of the Philippines. OECD 2018, Economic Outlook for Southeast Asia, China and India, p. 20 provides figures for ASEAN countries. The ASEAN secretariat itself gives a slightly more conservative figure of 4.8% for 2017. Cfr. Investing in ASEAN-2017, p. 6.

  2. 2.

    The military regime changed the name of Burma to Myanmar, and the latter is used in this book.

  3. 3.

    Trade had motivated their arrival, but this led to occupation of territory. The growing demand for spice was inelastic relative to the Portuguese supply in the sixteenth century. The Dutch and the English joined in the trade in the late sixteenth century but also were only somewhat sporadic in supplying the European market, leading to price swings. The problem was the scale of the undertaking. Individual expeditions were capitalized on a one-time basis. England was the first to create a permanent company sending multiple expeditions to Southeast Asia. Some 200 merchants and nobles invested some £70,000 in a venture which on December 31, 1600, obtained a charter from the Queen of England granting a 15-year monopoly on all English trade between the Cape of Good Hope and the Straits of Magellan. This would become the British East India Company and lasted until the nineteenth century. The Dutch followed suit in 1602 with the formation of the publicly traded Dutch East India Company (Vereenigde Oostindische Compagnie; VOC). King Louis XIV chartered the Compagnie française pour le commerce des Indes orientales in 1664.

  4. 4.

    Some nationalism was already extent in most of the colonies/territories previous to the Second World War. Religion played some role. It was one factor among many in the Moslem areas like present-day Brunei, Indonesia and Malaysia but not dominant. Theravada Buddhism, on the other hand, was a stronger source of nationalism in Cambodia, Myanmar and Thailand (see Keyes 2016).

  5. 5.

    The full declaration is available at many web sites in English and in Nguyễn 2002, p. 71.

  6. 6.

    For a graphic summary of the evolution of the Malaysian peninsula and British Borneo from the eighteenth century until 1984, see https://upload.wikimedia.org/wikipedia/commons/3/3d/Malaysia_tree_diagram.svg.

  7. 7.

    Estimates vary. See, for example, Jensen 1967, p. 6, using religion as a proxy for ethnicity, and Panikkar 1943, p. 98.

  8. 8.

    He had adopted the 1920s concept of Indonesia Raya—a Greater Indonesia including the Malay Peninsula and all of Borneo. Indonesian opposition led to the 1963–1966 Konfrontasi—a low-level, undeclared war along what is today’s border between Malaysian and Indonesian Borneo. The idea was that the division between Malaysia and Indonesia was an after-effect of colonization by two different European countries that separated the Malays into two different nations.

  9. 9.

    The Singapore government provides web pages with a reasonably detailed timeline of Singapore at http://eresources.nlb.gov.sg/history. See also http://countrystudies.us/singapore/.

  10. 10.

    This the full official name of the country. Negara means (more or less) “state.” Darussalam means “abode of peace.” The word Brunei has the same historical derivation as “Borneo.”

  11. 11.

    Cfr. United Nations, Economic and Social Commission for Asia and the Pacific (ESCAP) (2014). Asia and the Pacific: A Story of Transformation and Resurgence.

  12. 12.

    There were jurisdictional and sovereignty issues that impeded the early participation by Japan and Korea. Korea was divided at the 38th parallel between the USSR-run North and the US-run South. As for Japan, the Supreme Command of Allied Powers (SCAP) administered the country and was responsible for external affairs. Japanese advisers accompanied SCAP representatives to ECAFE at its inception before Japan became an associate member in 1952 and full member in 1954 (Mie 2008). ECAFE was renamed the Economic and Social Commission for Asia and the Pacific (ESCAP) in 1974.

  13. 13.

    For a somewhat more detailed relation of events from the Second World War to the founding of the ASA, see Shimada 2010, pp. 31–55. For events over the short history of ASA, see Pollard 1970 and Tarling 2007.

  14. 14.

    GDP can be measured on the use side as well as the production side. On the use side, it is used for investment, consumption, net exports and government spending on goods and services. Gross capital formation is the measure of investment and “consists of outlays on additions to the fixed assets of the economy plus net changes in the level of inventories. Fixed assets include land improvements (fences, ditches, drains, and so on); plant, machinery, and equipment purchases; and the construction of roads, railways, and the like, including schools, offices, hospitals, private residential dwellings, and commercial and industrial buildings. Inventories are stocks of goods held by firms to meet temporary or unexpected fluctuations in production or sales, and work in progress. According to the 1993 SNA, net acquisitions of valuables are also considered capital formation. Data are in constant 2010 U.S. dollars” (World Bank national accounts data). Non-economist readers can find the definition of other technical terms on the Internet, such as at http://documents.worldbank.org/curated/en/541831468326979631/pdf/322800PUB00PUB0d0bank0glossary01996.pdf.

  15. 15.

    This works out to about 5% of GDP. However, this does not compare directly with capital formation as the World Bank points out: “FDI can be used to finance fixed capital formation, however it can also be used to cover a deficit in the company or paying off a loan. Thus, you cannot say FDI is always included in gross fixed capital formation.” https://datahelpdesk.worldbank.org/knowledgebase/articles/195312-is-foreign-direct-investment-fdi-included-in-gro. Accessed September 24, 2018.

  16. 16.

    Imports and exports do affect this indicator. Singaporeimports most of its food. It can afford to do so. In theory, a highly productive agricultural economy (most workers being agricultural workers) could export most of its food. In practice, agriculture does not add as much value as industry and many services.

  17. 17.

    The data also include expenditures by non-profit institutions serving households (NPISH) that are not mainly financed and controlled by government and which provide goods or services to households for free or negligible symbolic amounts. These include political parties, churches, and so on, and their expenditures are far less than those of households.

  18. 18.

    In addition, Afghanistan is an eighth member state of the South Asian Association for Regional Cooperation. The author did not ascertain if Afghanistan is included in this statistic, as it would not have affected rankings.

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  1. Université du Québec à Montréal, Montréal, QC, Canada

    Roderick Macdonald

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    Roderick Macdonald

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Macdonald, R. (2019). Southeast Asia and the AEC, an Introduction. In: Macdonald, R. (eds) Southeast Asia and the ASEAN Economic Community. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-19722-3_1

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  • DOI: https://doi.org/10.1007/978-3-030-19722-3_1

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  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-030-19721-6

  • Online ISBN: 978-3-030-19722-3

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