The Ten Commandments of Applied Regional Integration Analysis: The African Case

In the literature on economic integration, the optimum currency area (OCA) theory says that there should be a high degree of trade between potential members of a monetary union for them to benefit from the use of a single currency. This study uses an augmented gravity model of trade to estimate the East African Community's (EAC) trade effects, as this community decided to participate in a monetary union by 2024. The study uses the fixed effect filter (FEF) estimator, which follows a two‐step approach and outperforms the standard fixed effects (FE) estimator. The results indicate that EAC has the potential to increase trade among partner states by 122% more than expected from the normal trade levels. The study, therefore, supports the ongoing East African Monetary Union process. However, to improve the likelihood of creating a more sustainable monetary union, the study recommends these countries to primarily focus on the full implementation of the customs union and common market steps. The main contribution of this study is that it provides robust estimates of the EAC's effects on intra‐regional trade using more recent data and updated econometric techniques.

Section: Related Literaturementioning

confidence: 99%

Estimation of the East African Community's trade benefits from promoting intra‐regional trade

Umulisa

2020

“…En ce qui concerne le commerce intra, les communautés africaines sont classées parmi les dernières (Ebaidalla et Yahia, ; Charaf‐Eddine et Strauss, ). Plusieurs raisons sont évoquées cet effet, entre autres les contraintes auxquelles font face les secteurs primaire et manufacturier, le faible capital infrastructurel et la mauvaise qualité de la gouvernance (Shuaibu, ).…”

Section: Quelques Faits Stylisésunclassified

Monnaie unique et intégration par le marché en Afrique: le cas de la CEEAC et de la CEDEAO

Mignamissi¹

2018

Résumé L'objectif de cet article est d'évaluer, à la lumière de la théorie endogène des zones monétaires optimales, l'effet potentiel de la monnaie unique sur le commerce bilatéral dans deux Communautés Économiques Régionales africaines (la Communauté Économique des États de l'Afrique Centrale et de la Communauté Économique des États de l'Afrique de l'Ouest). L'évaluation est faite à partir d'un modèle de gravité augmenté, estimé selon la méthode du Pseudo‐Maximum de Vraisemblance. Au terme des analyses, nous parvenons au principal résultat selon lequel l'effet potentiel de la monnaie unique sur le commerce bilatéral est positif et significatif, mais il diffère selon les Communautés, à cause des caractéristiques des pays membres. Ce résultat invite les responsables politiques des Communautés Économiques Régionales africaines à accélérer les étapes du calendrier d'Abuja, dans l'optique de mettre sur pied une monnaie unique africaine dans un délai raisonnable.

“…This contribution builds on the need for more economic integration and policy harmonization discussed in Africa (Akpan, ; Kayizzi‐Mugerwa et al ., ; Njifen, ). Others include: Charaf‐Eddine and Strauss (); Baricako and Ndongo (); Nshimbi and Fioramonti (); Ebaidalla and Yahia (); Ofa and Karingi (); Shuaibu () and Tumwebaze and Ijjo (). This inquiry is based on two theories: (1) countries with lower levels of the underlying factors (per worker output, TFP and technological gain) are more likely to catch up their counterparts of higher levels.…”

Section: Introductionmentioning

confidence: 99%

The Comparative Economics of Catch‐up in Output per Worker, Total Factor Productivity and Technological Gain in Sub‐Saharan Africa

Ssozi¹,

Asongu²

2016

After investigating the effect of external financial flows on total factor productivity and technological gain, we use the beta catch-up and sigma convergence to compare dispersions in output per worker, total factor productivity and technological gain in Sub-Saharan Africa (SSA) for the years 1980-2010. The comparative evidence is articulated with income levels, years of schooling, and health factors. We find; first, a positive association between foreign direct investment, trade openness, foreign aid, remittances and total factor productivity. However, when foreign direct investment is interacted with schooling, it is direct effect becomes negative on total factor productivity. Second, beta catch-up is between19.22% and 19.70% per annum with corresponding time to full catch-up of 25.38 years and 26.01 years respectively. Third, we find sigma-convergence among low-income nations and upper-middle income nations separately, but not for the entire sample together. Fourth, schooling in SSA is not yet a significant source of technology, but it can make external financial inflows more effective. Policies to induce external financial flows are not enough for development if absorptive capacity is low. More policy implications are discussed. JEL Classification: E23 F21O11 O33 O55