APEC: The Association of Southeast Asia and Newly Industrialized Economies

The economic linkage between the Association of Southeast Asia Nations (ASEAN) and Newly Industrialized Economies (NIES) is analyzed for how these linkages can promote the trade and investment associated with technology in the context of the Asia Pacific Economic Cooperation (APEC). APEC is an open regional organization for encouraging economic interchange based on a liberal trade regime. Two-way trade between ASEAN and NIES grew rapidly in the last two decades. NIES' experience in the absorption of imported technology is applicable to workers of ASEAN, allowing them to adjust to industrial working conditions, and providing on-the job training to both labor and management. Thus NIES have much to offer ASEAN in regard to expanding the trade horizon of their industrialization within the framework of APEC. INTRODUCTION The purpose of this study is to assess the economic linkages between the Association of Southeast Asia Nations (ASEAN) and Newly Industrialized Economies (NIES), and to indicate how these linkages can promote the trade and investment associated with technology in the context of APEC. ASEAN and NIES have had a pressing need for an economic cooperative mechanism to help countries adapt to the changing global economy. During the Cold War, the U.S. provided the massive military presence that protected Asian nations, ensuring stability which fueled the Asian economic miracle while protecting smaller Asian nations from their neighbors. The end of the Cold War, the European Community (EC) of 15 member countries, and the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) demonstrate the changing world economic order. Thus the Asia-Pacific economies have to determine their new positions in the context that the determinant common characteristic of their economies is openness to the outside world for generating regional growth. The contributions of NIES and ASEAN to the intra-Pacific trade have grown impressively. THE ECONOMICS OF APEC APEC is an open regional organization for encouraging economic interchange based on a liberal trade regime, contending that it bridges the gap between the important developing market economies of ASEAN and NIES so as to reduce possible tension and North-South polarization within APEC. NIES are strong supporter of APEC, since they are fearful of being left out of other groupings. They want a forum in which they can have an effective voice. Moreover, they oppose creation of an East Asian Economic Caucus, fearing that if such a bloc were to be formed Malaysia and Indonesia would have no choice but to be tightly involved in the Western trading system and that their influence would become largely reduced if ASEAN is absorbed into the much larger APEC. APEC can serve as an umbrella organization of ASEAN as well as an effective counterforce to the potential inward looking bloc of EC. It also promotes regional trade liberalization, monitors and influences the shape of other regional organization, develops projects requiring regional cooperation, and builds link with nonmarket economies. APEC will not evolve into an integrating organization like EC. But increasing policy interdependence requires the establishment of mechanisms for effective communication of policy interests and priorities. APEC serves to diffuse tensions, enabling the region to cope with the challenges of the 1990s. APEC could also serve politically to put pressure on EC and on other regions for further progress by addressing its interests in terms of trade and investment issues. ASEAN stand as the cohesive regional entity. The similarity of resources and factor endowments among ASEAN have rendered their economies competitive with each other rather than complementary, resulting in the intra-trade of about 15 percent of total ASEAN trade in 1980s. Even though ASEAN have historically had close trade and investment ties with Western Europe, this changed drastically in the last two decades as it focused on Asia-Pacific countries. …