Article at a glance:

Integrating Southeast Asia's economies

Southeast Asia's economies are falling behind. Although it offers a market of 560 million people, rich natural resources, and skilled labor, investors increasingly choose to put their money into the large and integrated Chinese market, where labor is often cheaper. Efforts to create a common market under the banner of the Association of Southeast Asian Nations (ASEAN) haven't halted the fragmentation, so different prices, tariffs, and regulations still divide the region into a collection of subscale economies.

The take-away

To restore Southeast Asia's competitiveness, its leaders must improve the productivity of the region's workers and reduce costs across the production value chain. Barriers to free trade should be reduced to create a true single market where companies and consumers alike can benefit from economies of scale.