Financial Economics

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Browsing Financial Economics by Subject "Africa - Economic Intergration"

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    Convergence and Economic Integration in Africa: the Case of the Franc Zone Countries
    (AERC, 2010-08) Dramani, Latif A.G.
    Using the convergence theory inspired by models of endogenous growth, this paper analysed convergence in the economies of the Franc Zone countries in Africa. In recent years studies on the convergence of economies using beta- and sigma-convergence theories have been improved by taking into account spatial phenomena that had until then been neglected by specification models. Using an econometric validation based on cross-sectional and panel data, the study tested a number of hypotheses, the main ones being the convergence of the economies of the West African Economic and Monetary Union (UEMOA) and Economic and Monetary Community of Central Africa (CEMAC) zones through certain economic and budgetary variables, the existence of spillover effects, as well as the search for a common growth path for the economies of the two zones. The study’s findings show that the convergence process, and hence that of integration, has not been carried out uniformly in the Franc Zone: the process has been given greater emphasis in UEMOA than in CEMAC Zone. Further, the technique used to measure the conditional convergence model made it possible to highlight the existence of key variables that help to maximize the convergence speed. A more refined convergence approach, which used similarities related to production factors and those related to natural advantages made it possible to highlight the presence of a convergence club. The study found a period-related convergence in the cotton-producing countries, coffee-producing countries and coastal countries. This shows that the hypothesis of a common convergence path in the Franc Zone has not been borne out by our study. The analysis of spatial effects has brought to the fore the existence of inhibitory effects on the convergence speed. Taking border effects into account contributed to reducing the convergence speed by half on average over the post-devaluation period and by one-fifth over the structural adjustment period.