PUBLICATIONS & REPORTS

PUBLICATIONS & REPORTS

Preferences, Interest, and Regional Integration: The Development of the ASEAN Industrial Cooperation Arrangement

Author Hidetaka Yoshimatsu
Date of Publication 2000. 10
No. 2000-19
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Contents Introduction

This article is concerned with regional economic cooperation and integration in East Asia. While the previous research focuses on international factors such as power relations among major states and market power, or the states’ interest as factors qualifying regional economic cooperation, this study highlights preferences and activities of foreign multinational corporations (MNCs). This study assumes that as foreign MNCs in small local market sought greater markets for achieving an efficient production level, they raised their preferences for regional economic arrangements, and that these preferences and functioned as critical factors promoting regional economic integration in the Association of Southeast Asian Nations (ASEAN) region. The case of the ASEAN Industrial Cooperation (AICO) arrangement showed complicated development patterns. While MNCs successfully encouraged the states to introduce the AICO arrangement in 1996, the arrangement did not work effectively after its introduction because of the states’ adherence to maintaining their national interest, seeking to increase the benefits of their local economies and firms. The ASEAN members relaxed regulations concerning AICO applications later. This policy change stemmed from a renewed interest in regional economic cooperation as a consequence of the Asian economic crises in 1997-98, as well as persistent pressure from manufacturing MNCs.