ASEAN, AFTA and the ''new regionalism''

This paper considers two questions. The first is why ASEAN chose to form AFTA in 1993 after previous economic cooperation schemes had been of more limited scope. It is argued that by the early 1990s, the rationale for a regional trading area had changed; the primary economic purpose was no longer trade creation but the avoidance of investment diversion to other parts of the world economy. The second, and related, question considers how the formation of AFTA relates to the latest wave of regionalism in the world economy. I argue that the ''New Regionalism'' is intimately linked to the dramatic increase in global capital flows since the mid-1980s and that two of the most interesting and important characteristics of the ''New Regionalism'' are the emergence of ''North-South regionalism'' and ''multiple regionalism.'' The implications of this for the future evolution of AFTA, and its relationship with other regional trading initiatives, are assessed.