Macroeconomic Convergence in Southern Africa Development Community
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Date
2016-09-30
Authors
Simwaka, Kisu
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
This paper examines progress and prospects of macroeconomic convergence in SADC.
The study uses descriptive analysis and statistical tools to establish convergence. Under
statistical tools, we use gap analysis and box-whisker plots to observe the general
behaviour of relevant variables over time, as well as convergence at individual level
towards the targets. Empirical analysis indicates that performance of SADC countries
against macroeconomic convergence targets has been rather mixed, largely because
some targets are overly ambitious. The majority of the countries are not converging
to the set macroeconomic convergence criteria, although overall performance is better
over the years. Performance of public debt against its target has been the best amongst
all of the targets, with 12 of the 14 member states within the target in 2011. The worst
performance is with regard to import cover, with inflation, fiscal deficit and real GDP
growth somewhere in between. There is a clear tendency of convergence in monetary
policy across SADC countries, as reflected in substantial decline in inflation rates over
the past two decades. Most countries have made good progress in bringing inflation rates
towards single digits. Most importantly, for most SADC member states, public finances
are in a much better state than previously, with fiscal deficits at manageable levels in
many countries, and public debt at sustainable levels. However, despite evidence of
the tendency for macroeconomic convergence, this has not led to sustainable economic
growth. The majority of the countries are not converging to the set MEC, although overall
performance is better over the years. Countries are progressing towards the criteria at
different rates, so convergence per se may not be the most important issue.
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Keywords
Macroeconomic convergence, , process, , progress, , SADC