ASEAN-5: Further Harnessing the Benefits of Regional Integration amid Fragmentation Risks

IMF Working Papers, September 15, 2023

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Canonical URL: ASEAN-5: Further Harnessing the Benefits of Regional Integration amid Fragmentation Risks

Authors: Nuri Baek, Kaustubh Chahande, Kodjovi M. Eklou, Tidiane Kinda, Vatsal Nahata, Umang Rawat, Ara Stepanyan
Published: September 15, 2023
Series: IMF Working Papers
DOI: https://doi.org/10.5089/9798400253706.001

By Nuri Baek, Kaustubh Chahande, Kodjovi M. Eklou, Tidiane Kinda, Vatsal Nahata, Umang Rawat, Ara Stepanyan
September 15, 2023
IMF Working Papers, Working Paper No. 2023/191
Pages: 46
Volume: 2023
Issue: 191
DOI: https://doi.org/10.5089/9798400253706.001
Stock No: WPIEA2023191
ISBN: 9798400253706
ISSN: 1018-5941

The ASEAN-5 region comprises Indonesia, Malaysia, the Philippines, Singapore, and Thailand.
The region has benefited substantially from integration with the world economy, particularly through trade.
Rising risks of geoeconomic fragmentation could reverse some gains reaped from globalization over past decades.
Advancing regional integration among ASEAN-5 members can enhance the region’s resilience against external headwinds.

Despite sizeable progress, particularly in regional trade integration, financial integration lags behind trade integration in ASEAN-5.
A higher degree of regional financial integration could generate sizeable output gains for the region.
Firm-level evidence shows digitalization supports regional integration by helping firms better integrate into global value chains.
The benefits of digitalization for integration are stronger for small and medium sized enterprises.
Digitalization can help firms move up the value chain through the production of more sophisticated products (higher export sophistication).

Subject: Digitalization, Economic integration, Exports, Financial integration, Financial markets, Financial sector development, International trade, Technology, Trade integration
Keywords: Asia and Pacific, digitalization, Exports, external finance dependence, financial integration, Financial sector development, firm growth, firm Growth, firm level result, fragmentation risks, Global, goods export sophistication, Trade integration

Strengthen regional financial integration in ASEAN-5 to capture potential sizeable output gains.
Promote digitalization policies that enable firms—especially small and medium sized enterprises—to integrate into global value chains and increase export sophistication.
Pursue complementary measures to deepen trade integration while addressing fragmentation risks to preserve gains from globalization.

IMF Working Paper No. 2023/191 (September 15, 2023).