Who's Ready for Asean 2015? Firm Expectations and Preparations in the Philippines

New-new trade theory makes predictions regarding the types of firms most likely to benefit from increases in economic openness. This paper exploits the launch of the ASEAN Economic Community in 2015 to test predictions regarding the types of firms that are optimistic about, and prepared for, increased regional integration. We introduce data from an original survey conducted just prior to the launch of the AEC of over 300 mostly multinational firms operating in the Philippines. We find that firms’ prior exposure to other economies in the region is a strong and positive predictor of both optimism and preparation. A firms' capabilities (i.e., size, profitability, and growth), on the other hand, predict preparation strongly and optimism only weakly. Of particular relevance to policy makers, we also find that firms’ primary policy demand on the Philippines government is for more information and communication, and that even highly capable firms make this demand. Our findings suggest that, despite outreach efforts by the Philippines government, a lack of information continues to impede firms’ abilities to seize the new opportunities associated with regional integration

Business · Economics · International trade · Corporate Finance and Governance · International Business and FDI · Working Capital and Financial Performance