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Chapter 2

LITERATURE REVIEW

2.1 Introduction

2.2 The Association of Southeast Asian Nations

The Association of Southeast Asian Nations or ASEAN was established on 8 August 1967 in Bangkok by the five original Member Countries, namely, Indonesia, Malaysia, Philippines, Singapore, and Thailand. some other countries were added to this association afterward, the first one was Brunei Darussalam which joined ASEAN joined in 1984,after formation of this association and after joining Brunei Darussalam to this association some other countries of south east asia region found it beneficial to join this association in order to empower their role in the region and also worldwide, these countries were Vietnam which joined in 1995,Lao PDR in 1997 and Cambodia in 1999.(Maidan, Jamil, Flores, and Jun Abad, 1997).

In 2006, the ASEAN population was about 560 million and the area which was under this association was 4.5 million square kilometres.

Their total gross domestic product were almost 1,100 billion USD and they had a total trade of about 1,400 billion USD in 2006(“ASEAN Action Plan”, 2008).

ASEAN declared that their goals and purposes are: accelerating all members of association economic growth, social progress and cultural development; ; and to promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries in the region and adherence to the principles of the United Nations Charter (Rajaratnam, 1992) .

ASEAN leaders adopted ASEAN vision 2020 on their 30th Anniversary and they agreed on a shared vision of members of this association as a concert of Southeast Asian nations, outward looking, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring societies.

The ASEAN leaders decided on establishing three different but parallel divisions, namely, ASEAN Security Community, ASEAN Economic Community and ASEAN Socio-Cultural Community.

The Economic community of the ASEAN association aim was to establish this association as single market and a group of countries which are known as production base economies. Also they used diversity that characterises the region as an opportunity to make ASEAN more dynamic and to make it a stronger segment of worldwide supply chain.

ASEAN set two integration strategies in order to move to its targets more effectively and to enhance its economic competitiveness. these two major strategies are:

? Roadmap for Financial and Monetary Integration of ASEAN in four areas, namely, capital market development, capital account liberalization, liberalization of financial services and currency cooperation;

? Trans-ASEAN energy networks, which consist of the ASEAN Power Grid and the Trans-ASEAN Gas Pipeline Projects (Pitsuwan, 2008).

In continue we will have a look at the economy situation of five major ASEAN countries.

The level of economic development of any country can be drawn or explored from its growth in level of National income or its level of growth in Gross Domestic Production(GDP) or in brief total economy growth .during the history of economics so many factors have been investigated in order to determine their effect on GDP growth and National Income(NI) of the