Economic Integration in Southeast Asia: Assessing the Impact of the ASEAN Economic Community (AEC) on Regional Trade and Investment

Abstract

The ASEAN Economic Community (AEC) was established to enhance economic integration in Southeast Asia by supporting the liberalisation of trade, investment, and economic cooperation in the region. Although ASEAN has made significant progress in terms of tariff reductions and drawing in an influx of foreign direct investment (FDI), challenges remain in terms of non-tariff barriers, regulatory differences, and uneven economic growth among member states, which hinder further integration. One of the key challenges is the relevance of the AEC in terms of achieving its integration objectives. There are scholars who stressed the role of the community in promoting regional trade and investment, but there are those who argue that the consensus-based strategy of ASEAN and the lack of strong enforcement mechanisms limits its ability to deal with structural economic challenges. The study critically evaluates these debates in terms of neoliberal institutionalism by focusing on the impacts that ASEAN governing structures have on trade and investment performance. The study useda qualitative research method by reviewing policy documents, academic literature, and institutional reports. The results reveal that, despite the contribution of the AEC to the growth of the region, inconsistency of governance, non-tariff barriers, reliance on foreign trade partners, and economic imbalance within the region weaken its efficiency. This study finds that even with these hitches, the institutional structure of ASEAN is still vital in perpetuating regional trade and investment and that there is a need to reform the institutions to improve policy harmonisation, lower trade barriers, and augment institutional enforcement mechanisms.