ABSTRACT
This chapter discusses the impacts of integration on the Association of Southeast Asian Nations (ASEAN) region from the introduction of the ASEAN Economic Community (AEC). It argues that international integration will initiate processes of change in nations' internal structures within the ASEAN region. The economic theory of international trade in the Hecksher–Ohlin–Samuelsson (HOS) setting has given valuable knowledge to the understanding of reasons behind trade and growth of welfare. It has had impacts on the policy-oriented modelling of such processes. The HOS theory, models based on this theory, and other means to analyze and evaluate policy actions have been developed in order to make reliable forecasts and to identify relevant policies. In models based on the HOS theory, commodities are homogeneous; they thus fit best in two-nation settings with exchange of commodities according to the relative comparative advantage of the nations.
