Despite the formal launch of ASEAN Economic Community (AEC) in December 2015, it is debatable whether the Community will work well. Instead, it is more appropriate to view the launch of the AEC as an opportunity to align the efforts in integrating the ASEAN and to identify its strengths and weaknesses. Therefore, the impact of the AEC on regional trade and investment is likely to be minimal or even not visible at all in the early stage immediately following the launch. However, the Nay Pyi Taw Declaration on the ASEAN Community's Post-2015 Vision in 2014 is a display of the ASEAN's willingness to advance the AEC as a long-term vision. When standardized institutions and policies are implemented in the member states, the AEC will be able to successfully integrate the ASEAN economy.
This study begins with an overview of the progress in ASEAN economic integration and responses from surrounding nations. At its establishment in 1967, the motivation for ASEAN was mainly political, not economic. It was only in the late 1970s when the ASEAN started to express interest in economic integration and cooperation. In 1992, economic integration within the ASEAN fully emerged as a topic due to the ratification of ASEAN Free Trade Agreement. Unprecedented growth of Chinese and Indian economy had pulled foreign investors away from ASEAN. Thus, a strong sense of economic integration and cooperation to foster investment conditions in the region had emerged. The ASEAN also pursued synergy by connecting their electronics and automotive industrial network with the East Asian production network.
In other words, the urge for AEC, that is, economic integration in the ASEAN, emerged voluntarily to maintain competitiveness in the global market and to secure regional order in the division of labor. The Community also implies the willingness to participate in the global value chain and to advance into the global economy while maintaining ASEAN Centrality. Thus, the Community is significant as an open economic community.
Major economies in the Pacific region, namely the United States, China and Japan have not expressed official response to the launch of the AEC. The abovementioned countries consider the matter merely as an extension of their current policy towards the ASEAN. Guided by their Asia pivot policy, the United States has expressed no objection. This is mainly because the U.S. seeks to restrain the rise of China with the new Economic Community. In addition, Japan has traditionally maintained strong relationship with countries in the Southeast Asia region, and many Japan-based multinational companies possess production facilities and sufficient supply chain in the region. Such activities suggest that Japan will become the largest beneficiary of the AEC. Finally, China seeks to connect the ASEAN region in their One Belt One Road initiative. China views the possibility in the ASEAN as their off-shore 'Silk Road' and will pursue mutual benefit.
 As for Korea, it will approach the launch of the AEC in a comprehensive way that encompasses political, social and cultural aspects. Considering the strong ties between Korea and ASEAN in terms of trade and investment, the launch of AEC has to be observed more from an economic perspective than other perspectives. In the second chapter, we conduct in-depth survey to review the awareness of Korean businesses regarding the establishment of the AEC and to see if the response to the launch of the AEC has been prepared. Survey questionnaires were distributed to both companies based in Korea as well as those based in the ASEAN region.
 The results showed low level of awareness regarding the launch of the AEC. Companies also struggled in obtaining information regarding the Community. Information disparity existed between large and medium-sized companies. Nonetheless, despite the low level of awareness, responses showed high expectation for the AEC in terms of improving business. Regardless, roughly 5% of the respondents had a prepared strategy or plan regarding the AEC, 41% answered that they are in the process of preparing for the AEC, and the remaining 55% of Korean companies did not recognize the need for a strategy at all.
 In sum, we conclude that the lack of strategies or plans is a result of an absence of understanding on the AEC. Disseminating information regarding the AEC and encouraging companies to prepare a plan is highly desirable; so that the companies are able to benefit from the launch of the AEC.
In the third chapter, the study categorizes the progress of the establishment of the AEC into three stages. The first stage begins in 1993 when the member states began to recognize the need for economic integration. The second stage is when initiatives took place between 2002 and 2007.
In the third stage, detailed efforts were made regarding the integration of the ASEAN economy. This study reviews the features of and transitions involved in that integration process. Despite some fluctuations, the share of regional trade displayed a constant increase since the 1990s. However, the figures of intra-ASEAN trade became stagnant in the third stage due to the significant rise in trade with major countries out of the region namely, the U.S., Japan, China and Korea since ASEAN+1 FTA. Foreign direct investment soared in the third stage (2007-2015) mainly due to the ‘ASEAN+1 FTA’ than regional integration. The study also finds that there were insignificant changes in the trade structure of intra-ASEAN trade. The trade pattern also showed heavy focus on certain type of goods. The change of export items within the ASEAN is due to the dispersion of production network within the region, which is significantly related to the influx of inward FDI. The FDI had increased except during the economic crisis in 1998 and global financial crisis in 2008. Direct investments from major economies have consistently increased during the second and third stage of economic integration, except for global financial crisis.
Japanese multinational companies pursue efficiency by establishing production networks between ASEAN member countries, through minimization of risk by considering country specific characteristics. With the AEC in consideration, a large number of Japanese firms have newly invested or expanded their investment to ASEAN during 2012 and 2013.
Therefore, it is probable that Japan will benefit the most when the ASEAN economy is integrated. China's investment to ASEAN was due, in fact, to both the changes of the government's industrial policy to lower the share of the labor intensive industry and the private firms' interest to avoiding high labor costs; and not to a response to the ASEAN economic integration.
The increase in direct investment from Korea, China and Japan is reinforcing the production network within the ASEAN region. Vertical trade which deals with raw materials and intermediary goods is relatively small in intra-ASEAN trade compared to trade with major investors such as Japan, the U.S. and Korea. With that fact considered, trade within the region will increase only when major foreign investors strengthen the regional production network. In other words, because ASEAN participation in a global value chain is more likely to occur with foreign direct investment, regional trade will only increase when the investors adjust their investment within the ASEAN region.
Through a comprehensive observation, the study confirms that there is very little shift in intra-ASEAN trade and investment structure without the flow of foreign direct investment. Under such circumstances, it is doubtful that there will be changes to the structure with the launch of an economic community. The following chapter (chapter 4) experiments with the change in regional trade, investment and industrial structure assuming the launch of AEC through dynamic CGE models. According to the findings, GDP change in each ASEAN country was nominal. Little change was observed in net export composition and intermediary material input by each industry. Considering the previous findings that there was little change in intra-ASEAN trade structure throughout the history of ASEAN integration, the results were predictable. Therefore, it is difficult to conclude that economic integration will lead to trade and investment adjustment within the ASEAN region.
Also, as the member countries’ autonomy remains intact within the AEC, extensive amount of time is required with the coordination of different rules and institutions. However, as economic integration progresses, the rules and institutions will sooner or later be adjusted in a coordinated manner within the Community since investment decisions of multinational firms are more likely to depend on the changes of industrial policy. That is, each ASEAN member country will transform industrial policy in order to induce foreign company investments. Chapter Five seeks to compare different industrial policy as well as economic development strategy of ASEAN members.
Considering the study results, the final chapter provides policy implications for Korea regarding the launch of AEC. First of all, the AEC must be observed and analyzed in the context of international politics and economy, for the U.S.-China-Japan triangular relations can affect the progress of the AEC integration. Therefore, the politics and economic relations among major countries including the U.S., China and Japan should be carefully observed and measures should be arranged accordingly. Second, there is a strong need to monitor the shifting industrial policy and institutions of individual ASEAN countries during the economic integration. In the process of regional consolidation, such change in policy and institutions is likely to impose both challenges and opportunities to Korean firms. Third, it is worth considering the development of a regional production network between local firms and Korean firms based in the region. Due to the high dependency of regional trade and investment structure on multinational firms' investment decisions, local firms were indeed neglected from the scene. If there is a way to consider a measure to strengthen the relationship between local companies and Korean companies in the region with special attention paid to creating shared value, it may assist Korean companies expanding their footing in the region.
Finally, the AEC response to Trans-Pacific Partnership and the One Belt One Road initiative should be observed very closely. Since the TPP is heavily influenced by the U.S., there exists a potential destruction of the ASEAN Economic Community when the TPP and OBOR clash with one another. In addition, we have to consider the fact that foreign investor will determine the formation of production network within the ASEAN region. If the investors determine that the establishment of new supply chains of electronic components should take place in TPP member countries such as Vietnam and Malaysia, it is highly likely that Cambodia and Laos would be isolated from this kind of industry.