Assessing the Impact of the ASEAN Economic Community

Abstract

Consequences of the ASEAN Economic Community (AEC) are investigated using a dynamic computable general equilibrium (CGE) model. Quantitative assessments of the effects on economic welfare, trade flows and sectoral output are offered. When the removal of trade barriers are combined with reductions in administrative and technical barriers and lowering the trade and transport margins under the assumption of endogenously determined productivity, the estimated welfare gains for the year 2015 range from 1.1% in Indonesia to 9.4% in Thailand. The results suggest that streamlining customs procedures and other reductions in administrative and technical barriers, as well as increased competition and improvements in infrastructure, are significant in enlarging the benefits of the AEC.