ABSTRACT
A commonly asked question in the area of international trade and finance is: What is the extent of economic integration in East and South-East Asia? The reasons for this question are multifarious. For instance, there is increasing evidence that real and financial integration (as subsets of ‘economic’ integration) are closely connected; it is plausible to consider a situation where trade integration is associated with more synchronous business cycles, together producing spillovers that facilitate the prospects for monetary integration (see Frankel and Rose, 1998). Monetary integration itself is rooted in the preconditions pertaining to integration and is well documented in the optimal currency area (OCA) literature. Furthermore, some political economy considerations can be either the cause or the effect of greater real and financial integration.
