ASEAN is the first regional initiated economic integration in Asia. The effects of the formation on the members' economic performance and the validity of propositions deduced from customs union theories are the major issues to be discussed in this paper.
Generally speaking, the formation of ASEAN has, to a varying extent, accompanied positive economic effects on its members in terms of economic growth and economic development.
The progress of economic cooperations among the ASEAN economies is found to be slow due to the inefficient structure and the lack of nations commitment. The importance of Japan, which is the dominant trading partner, as export market and import supplier, is diminishing. However, intra-ASEAN trade has not had much progress in relative terms over the 1980s due to the fact that no ASEAN member is capable of satisfying the needs of other members as a consequence of the prevailing primitive industrialization process within these economies.
The trade diverting nature of ASEAN has been proven to be beneficial to the members. Nevertheless, owing to the negligible ASEAN's influence in world market, the terms of trade effect is not obvious. The dynamic effect of the formation is found significant as economic development of the ASEAN economies is much rapid in the post-ASEAN period, especially after the Bali Summit.