Regional Economic Integration in Asia: Challenges and Recommended Policies

Regional economic integration is one of the most effective ways of fostering stability, addressing regional challenges, and increasing rates of economic growth. Strengthening regional cooperation and integration in different Asian sub-regions offers great potential for eliminating poverty and achieving inclusive and sustainable development. Hurdles remain, however, for further integration. The willingness to commit to “unity in diversity” is important to overcoming this, requiring the acceptance of cultural, linguistic, social, religious, and political differences. Such complex unities have been achieved in the European Union (EU) and elsewhere (Fella, 2002). Currently, in most Asian sub-regions, such political ambitions for economic integration have been scarce. This implies that a more cautious approach is needed in Asia than in other places. However, by studying the European context, we can derive valuable lessons for better fostering economic integration. Regional economic integration should first ensure the maximization of benefits for all participants. With this, complete cooperation is required to develop an effective and uniform regional business environment. Second, a well-developed infrastructure with an absence of trade barriers is needed. Various Asian sub-regions (e.g., Central and South Asia), however, suffer from a lack of infrastructure, which hinders trade opportunities. Difficulties in accessing capital also presents a key obstacle. In this regard, the role of infrastructure financing is very important. In the EU, their European Investment Bank maintains equitable financing for intra-EU projects. Open engagements with partner countries also play a key role. Third, over the past 30 years, different institutional mechanisms have sprung into existence in Europe that have created the basis for strategic economic integration. Such institutional mechanisms and initiatives are needed in Asia.