ECONOMIC IMPACT OF VIETNAM JOINING ASEAN

Abstract

In the post Cold War era, with the end of East-West standoff and the rise of regional trading blocs, the international political and economic environment has become less favorable for ASEAN. The regional grouping would need to reassess its role if it wants to remain relevant and viable. As a result, an expansion of ASEAN to include the other Southeast Asian nations would be timely and necessary. This would not only enhance ASEAN's political and economic position on the world stage, but would also mark the realization of its original goal of encompassing all the countries in the region.

Following Vietnam's policy reorientation towards economic reforms, the animosity and confrontation that characterized the ASEAN- Vietnam relations have given way to goodwill and cooperation. In fact, it has been announced that Vietnam would most probably join ASEAN in July 1995. Given the small size of Brunei, Vietnam's membership in ASEAN will therefore be the first significant act of expansion for the regional grouping.

On account of her large population and huge resource base, Vietnam's present and future economic potential is tremendous. Her membership in ASEAN would not only enlarge the regional market but would also enhance the region's attractiveness to foreign investors. Vietnam could also serve as a 'backyard' for the ASEAN countries to reconstruct their economies. On the other hand, with their higher level of development, the ASEAN countries could assist Vietnam in the transformation of her economy. ASEAN could also help to facilitate Vietnam's integration back into the world community. Nevertheless, due to the differences in levels of economic development and in political and economic systems, it is inevitable that the integration of Vietnam into ASEAN will have cost implications.

Through an analysis of the level of complementarity and competitiveness between the economy of Vietnam and ASEAN, this thesis seeks to evaluate and examine the economic impact of Vietnam joining ASEAN.