Mind the Gap: Perceptions on ASEAN Inequality

The ten member nations of ASEAN are seeking to build a community, as envisaged in the ASEAN Vision 2020:

…To transform ASEAN into a stable, prosperous, and highly competitive region with equitable economic development, and reduced poverty and socio-economic disparities.

Realizing this vision faces challenges from integrating highly disparate political systems and unequal economies: the GDP per capita of Singapore, a wealthy free-market city-state, is over 20 times that of Laos, a newer ASEAN member governed by a socialist party.

Within ASEAN, national policy makers and the Secretariat have been pro-active in addressing inequality by introducing the Initiative for ASEAN Integration (IAI), currently mid-way through Work Plan II (2009 – 2015). The IAI includes mechanisms to narrow the development gap between Cambodia, Laos, Myanmar, and Vietnam (CLMV) with the wealthier ASEAN-6.

Under the ASEAN-Canada Research Partnership, a mixed methodology of quantitative surveys and semi-structured interviews is being conducted with policy makers linked to ASEAN integration. The research objective is to understand perceptions on inequality within ASEAN and how these perceptions impact policy outcomes. The base assumption is that discourse on ASEAN inequality remains focused on equality of opportunity, not equality of outcome.

Background research indicates that since the Asian Financial Crisis (1997-98), two trends on inequality have been moving in opposite directions. Inequality between ASEAN members has been declining; CLMV are ‘catching up’ to the ASEAN-6. But relative income inequality within most ASEAN countries is rising as national elites capture more of the wealth. Overall, however, ASEAN members have lower domestic inequality levels in comparison to many countries in Africa or Latin America.

Inequality continues to rise in wealthier ASEAN nations such as Singapore and Malaysia, as well as low-income economies such as Cambodia and Laos. Conversely, countries of lower-middle income status, i.e., Thailand, the Philippines and Vietnam, have been able to reduce inequality slightly – within this group, Indonesia is the exception. Superficially, this runs counter to predictions based on the Kuznets curve: least developed agrarian and highly-developed service economies should have lower/declining inequality while industrial and manufacturing based economies should have higher/rising inequality.

Thus far, research interviews have revealed that managing inequality is paramount, which aligns with literature on perceptions of inequality in Asia. Without real or perceived shared benefits from regional integration, the probability of regional instability will rise. The message is clear: mind the gap.

There is a disconnect between regional policy forums and national legislators, which comes as no surprise. But this disconnect has impacts on policy outcomes. At a regional level, equality of opportunity relates to supporting CLMV so they may participate fully in the ASEAN process; the outcome is building ‘soft’ infrastructure through capacity building. At a national level, equality of opportunity relates to the ability of national economies to engage in regional markets; the outcome is to build ‘hard’ infrastructure.

Moving forward, this research will continue to explore perceptions of inequality and find institutional mechanisms suitable for transforming regional integration into inclusive, sustainable growth.

This blog post has been written by Matthew Bock. Matthew is an Analyst and Technical Advisor based in Indonesia and a Junior Fellow for 2012 under the ASEAN-Canada Research Partnership. For more information on the ASEAN-Canada Research Partnership, please click here.