ASEAN TRADE IN MANUFACTURED GOODS

Abstract

The ASEAN countries in general are exporters of primary commodities (with the exception of Singapore) and importers of manufactured products. Since the early 1970s, there have been significant shifts in the structure and pattern of trade of the ASEAN economies: ASEAN exports of manufactures rose tremendously. This can be partly explained by the series of external shocks that hit almost all open economies as well as the conscious policy shift towards exports of manufactures and incentives to promote their trade. It is the purpose of this exercise to study the changes that have occurred in ASEAN trade in manufactures. The period for analysis is from 1975 to 1986. This study found that ASEAN exports of manufactures are basically concentrated in a few commodities, namely resource-based and labour-intensive products. However, with changing comparative advantage and/or government's policies, some ASEAN members are diversifying into the production and export of technology-intensive and human capital-intensive goods. Malaysia is a good example. It was also found that ASEAN trade in manufactures are geographically concentrated in the industrially advanced countries, namely the US, Japan and the EEC. Over the years, trade within the ASEAN region has increased whereas that with the developed countries has declined. The reasons for this changing pattern may be attributed to the policies undertaken by the various governments to diversify the markets of manufactures away from the developed countries and the success of the ASEAN PTA scheme. This study also looks at the future prospects of ASEAN trade in manufactures. Though the external environment plays an important role, the ultimate factor that determines the success of ASEAN's drive to expand manufactured exports will continue to be domestic economic policies.