The Association of Southeast Asian Nations (ASEAN) is a political and economic association similar to the European Union (EU). Its membership includes several countries, such as Indonesia, Malaysia, Singapore, and Thailand, but does not include the region’s largest economies, such as Japan. ASEAN members have access to a free-trade area. Proposals to expand the ASEAN free-trade area to include Japan and China have met opposition. Explain why countries with lower standards of living (such as those recently admitted) are more likely to seek membership in ASEAN and identify which countries stand to lose from ASEAN’s expansion. Consider the importance of capital flows for living standards, using the production function approach.