Academic journal article Journal of Southeast Asian Economies

The Perceptions and Responses of Vietnamese Firms towards Deeper Regional Economic Integration: Case Studies from the Food Processing Industry

Academic journal article Journal of Southeast Asian Economies

The Perceptions and Responses of Vietnamese Firms towards Deeper Regional Economic Integration: Case Studies from the Food Processing Industry

Article excerpt

1. Introduction

Regional economic integration (REI) has become a desired goal within the world economy given the benefits it offers. Research has addressed different aspects of REI (Cuervo-Cazurra and Un 2007; Kim 2007; Chen 2009; de la Torre, Esperanga and Martinez 2011), with considerable interest within countries in the Association of Southeast Asian Nations (ASEAN) (Mirza and Giroud 2004; Plummer 2006; Ismail, Smith and Kugler 2009; Austria 2012; Petri, Plummer and Zhai 2012; Pomfret 2013). In general, this work confirms the potential benefits that deeper economic integration within a region can bring to member countries. It also sets out challenges firms in member countries may face and likely differences in benefits between member countries, and the need for them to adopt appropriate policy responses towards REI.

Many previous studies have approached the problems at a regional or national level. While some literature has addressed the responses of firms towards REI (Eden 2002; Cuervo-Cazurra and Un 2007; Cavusgil, Knight and Riesenberger 2008; Dunning and Lundan 2008; de la Torre Esperanza and Martinez 2011), these studies have been general and quantitative in approach. However, firms' strategies or responses to REI are likely to vary according to the context in which they occur and general studies are unlikely to fully capture reactions.

This study takes a micro approach to the perception and responses of firms towards REI utilizing five case studies of Vietnamese firms in the food processing industry. Specifically, we explore two key questions: (1) what do Vietnamese firms perceive to be the likely impacts of deeper regional economic integration under the ASEAN Economic Community (AEC); and (2) what are the responses of Vietnamese firms in anticipation of the AEC?

Because the responses of firms in an economy are likely to vary depending on the industry and the market they are in, we focus on Vietnamese companies in the food processing industry as a specific illustration.

The study contributes to the current literature on the responses of firms towards REI. It offers insight into the levels and sources of understanding that firms have towards integration and the strategic options that they face. It also provides insight to businesses on ways to improve their capabilities and offers policy makers a better understanding of possible policies to help domestic economic entities succeed under the AEC.

The paper is organized into eight sections. Following this introduction, we give a brief overview of the growing regional integration in ASEAN and the establishment of the AEC. Section 3 discusses the impact of REI on firms and their responses to deeper integration. The fourth section provides the research context, focusing on the Vietnamese food processing sector. Section 5 discusses the research methods adopted in this study. Key findings are provided in section 6. A discussion of these findings follows in section 7. The final section concludes.

2. The Context of Regional Economic Integration in ASEAN

ASEAN was established in 1967 by five initial members--Indonesia, Malaysia, the Philippines, Singapore and Thailand. The regional bloc expanded to include Brunei in 1984, Vietnam in 1995, Laos and Myanmar in 1997, and Cambodia in 1999. At the 2003 ASEAN Summit, the AEC was proposed. It was to be established by 2020. At the 2007 Summit, the year of implementation was brought forward to 2015. The AEC has four main goals: (1) creating a single market and production base with free flows of goods, services, capital and skilled labour; (2) developing a competitive region with clear competition policies; (3) promoting equitable economic development; and (4) developing a region integrated into global networks.

With the establishment of the AEC, ASEAN has become a region with deeper integration. At the same time, it has forged new economic arrangements with external partners such as the ASEAN+3 Initiative signed between ASEAN members and China, Japan, and Korea; the ASEAN-China Free Trade Area (ACFTA); the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and Korea; the ASEAN-Japan Comprehensive Economic Partnership (AJCEP); and the ASEAN-Australia-New Zealand Free Trade Agreement. …

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