Integrated Supply Chains – A Possible Citadel for Peace in Southeast Asia

Until recently, there seemed to be a growing consensus that the world at large was becoming more peaceful. Steven Pinker, for example, said in 2011, “The biggest single decline in violence has been in war between countries. In the last decade, that kind of war has almost vanished.” However, the recent uptick in wars, especially the Ukraine and Gaza wars, has destroyed this optimism. The ongoing Thailand-Cambodia military conflict that erupted on July 24, 2025 is a wakeup call to Southeast Asia. While ASEAN has created an oasis of stability and economic growth and a relatively much lower prospect of war in Southeast Asia, the region does not, unlike the European Union (EU) or North America, have zero prospects of war.

Scholars have argued that economies that integrate into the global trading system and contribute to the progress of other nations have fewer disputes. However, while trade has proven a potent weapon in reducing conflict since World War II, it is no longer sufficient to guarantee security and economic growth in this new era. More powerful mechanisms are needed to ensure that tensions between nuclear powers are contained.

Yet, it’s possible for the world to regain some of this optimism. Some parts of the world, like the European Union and North America, enjoy peace. There is zero prospect of war between any two EU or North American states. Can the rest of the world replicate this? If so, how? One helpful mechanism could be integrated supply chains. Supply chain integration can enhance peace and stability and provide a key pillar in human development. Integrating supply chains across countries, industries, and people builds upon current trade systems and fuels economic growth and security while addressing the challenges of overcapacity and stability.

The EU and North America are well integrated into supply chains, owing particularly to robust regional trade agreements. Such economic integration makes conflict more costly and cooperation more rewarding, providing powerful incentives for countries to resolve disputes peacefully. While East and Southeast Asia are also well integrated, they have a way to go before they are as integrated as the EU and North America. This essay puts forth six pillars by which supply chains can be further integrated across regions.

The first pillar is cross-border foreign direct investment. By investing in other countries, even if they might be potential or future adversaries, a country commits to being part of their future and assisting in their economic growth; these actions encourage problem-solving and diplomacy. For instance, Japan’s investments in Southeast Asian countries post-World War II strengthened ties and reduced tensions. Similarly, China’s investments into Vietnam from the 1990s onwards strengthened ties between the two countries after a prolonged period of military hostility and political tension.

The second is cross-border talent flows. With the Schengen Agreement, historical enemies, such as France and Germany, now share citizens throughout Europe. The higher living standards, growth in business opportunities beyond borders, and deeper people-to-people connections that emerged because of this sharing of citizens, labor, and talent played a major part in stabilizing intra-European geopolitics. An agreement that enhances talent flows and labor mobility in Southeast Asia would, similarly, help further integrate Southeast Asia.

The third pillar is technology sharing. US and European firms shared technology that drove Chinese growth and value creation in the automotive industry. After 40 years, China has transformed into a leading contributor to the global auto sector, generating trillions of dollars in profitability for Western multinationals. Indeed, the United States remains the largest export destination for intermediate goods from China. This dependence of American MNCs on China may help to prevent sharp breakdowns in bilateral relations, even as the US-China contest continues to heighten.

The fourth is geographical diversity of supply chains. Having multiple sources of production, spread across continents, helps mitigate risks associated with geopolitical tensions, such as tariffs and supply chain disruptions. Apple’s Global Manufacturing Network is an example as it sources from many countries, including chip production in Taiwan, assembly in China, Vietnam and India, and suppliers in the U.S., Japan, and South Korea. Supply chain diversification ensures that multiple countries have a stake in each other’s security. This serves as a form of insurance for collective economic well-being and growth.

The fifth is advanced, interconnected infrastructure. This helps to lower tensions and neutralize potential conflicts as the construction and operation of such infrastructure facilitates greater interaction between governments, while the improved connectivity facilitates greater people-to-people and business connections. Intraregional trade and investment would also receive a boost, increasing interdependence and raising the costs of conflict. Fortunately, countries in ASEAN have already begun to invest heavily in interconnected infrastructure, particularly through building high-speed railways and highways across peninsula Southeast Asia into China and India, as well as by enhancing digital cooperation and integration across the region.

The sixth pillar is regulatory alignment. Trade agreements and similar frameworks can align legal and regulatory systems, creating a shared framework that facilitates cross-border cooperation, enhances transparency, and helps prevent economic disputes from escalating into larger conflicts. In the era of artificial intelligence, it is more important than ever to be aligned on a broad framework across multiple companies. The ASEAN-led Regional Cooperation Economic Partnership (RCEP) is an example of a regional trade agreement that aligned different countries into a unified framework.

As current global institutions are unable or unwilling to effectively prevent geopolitical conflict, integrated supply chains can be a useful tool to help reduce conflict by fostering cooperation and stability and promoting shared economic growth across regions. Rather than being isolationist to protect oneself, a nation is more secure if it is integrated into global supply chains. This integration diffuses global power and war capabilities, thereby lessening the opportunities or incentives for one country to wage war against another. It compels all members in the supply chains to work together to make them successful and provide economic and national security.

Countries and regions embracing these elements of supply chain integration have seen less conflict than those that do not. The Ukraine War has shown that those not integrated into supply chains have more ability to take aggressive actions or are left at the mercy of others. Had Russia been further, if not entirely, integrated into European (and other) supply chains, it would have had significantly less room to maneuver for any potential conflict, and the consequences would have been far more dire than what it currently faces.

Peace becomes a priority when nations invest in each other’s stability. It is not grand speeches or summits that hold the world together—it’s ports, fiber lines, joint ventures, people, and factories. Well-integrated supply chains can therefore serve as conduits for goods and services and as the connective tissue of a more stable world, including in Southeast Asia.

The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect those of the Asia Research Institute, National University of Singapore.