The Process of Monetary Integration in Eastern and Southern Africa PDF Download
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Author: Raphael Abel Kasonga
Publisher:
ISBN:
Category : International economic integration
Languages : en
Pages : 80
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Author: Raphael Abel Kasonga
Publisher:
ISBN:
Category : International economic integration
Languages : en
Pages : 80
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Book Description
Author: Christian Sorgenfrei
Publisher: Diplomica Verlag
ISBN: 384285675X
Category : Business & Economics
Languages : en
Pages : 89
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Book Description
With the current situation in the European Monetary Union in mind, a Monetary Union in other parts of the world seems highly inadvisable. Nevertheless, Africa has some of the oldest Monetary arrangements in the world, dating back to the beginning of the 19th century. Is Africa particularly qualified for a Monetary Union? And furthermore, what features are necessary to make Monetary Arrangements between countries endurable? This study evaluates the prospects and the feasibility of a monetary union in the Southern African Development Community (SADC) from an economic point of view. Both the theory of optimum currency areas and the recent example of the European Monetary Union are employed to analyze the pros and cons of monetary unification. The theoretical implications are operationalized, first, by a broad analysis of economic and socio graphic data, and second, by estimating the degree of structural shock synchronization between SADC countries. Results obtained by an Autoregressive and Vector Autoregressive model indicate that a monetary union which includes all SADC members is neither desirable nor feasible in the foreseeable future. However, the study concludes that a small subset of countries, including South Africa, Namibia, Swaziland, Lesotho, Mozambique, Botswana and Zambia, could gain from forming a smaller monetary union.
Author: Steven Buigut
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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This paper uses VAR techniques to investigate the potential for forming monetary unions in Eastern and Southern Africa. All countries in the sample are members of various regional economic organizations. Some of the organizations have a monetary union as an immediate objective whereas others consider it as a possibility in the more distant future. Our objective is to sort out which countries are suitable candidates for a monetary union based on the synchronicity of demand and supply disturbances. Although economic shocks are not highly correlated across the entire region, we tentatively identify three sub-regional clusters of countries that may benefit from a currency union. We find some tentative evidence that some, though not all, sub-regions may benefit from a link to the Euro.
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: John Stuart
Publisher:
ISBN:
Category : Africa, Southern
Languages : en
Pages : 190
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Author: Paul R. Masson
Publisher: Rowman & Littlefield
ISBN: 9780815797531
Category : Business & Economics
Languages : en
Pages : 248
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Africa is working toward the goal of creating a common currency that would serve as a symbol of African unity. The advantages of a common currency include lower transaction costs, increased stability, and greater insulation of central banks from pressures to provide monetary financing. Disadvantages relate to asymmetries among countries, especially in their terms of trade and in the degree of fiscal discipline. More disciplined countries will not want to form a union with countries whose excessive spending puts upward pressure on the central bank's monetary expansion. In T he Monetary Geography of Africa, Paul Masson and Catherine Pattillo review the history of monetary arrangements on the continent and analyze the current situation and prospects for further integration. They apply lessons from both experience and theory that lead to a number of conclusions. To begin with, West Africa faces a major problem because Nigeria has both asymmetric terms of trade—it is a large oil exporter while its potential partners are oil importers—and most important, large fiscal imbalances. Secondly, a monetary union among all eastern or southern African countries seems infeasible at this stage, since a number of countries suffer from the effects of civil conflicts and drought and are far from achieving the macroeconomic stability of South Africa. Lastly, the plan by Kenya, Tanzania, and Uganda to create a common currency seems to be generally compatible with other initiatives that could contribute to greater regional solidarity. However, economic gains would likely favor Kenya, which, unlike the other two countries, has substantial exports to its neighbors, and this may constrain the political will needed to proceed. A more promising strategy for monetary integration would be to build on existing monetary unions—the CFA franc zone in western and central Africa and the Common Monetary Area in southern Africa. Masson and Pattillo argue that the goal of a creating a s
Author: Twahibu Kambi Djabir
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Following the successful introduction of the euro in Western Europe, several regional economic blocs in Africa are planning to launch a common currency as an intermediary step towards the emergence of a single currency for the entire continent. The purpose of this dissertation is to tackle several economic issues related to monetary integration and empirically apply it to the context of the Southern Africa Development Community (SADC). In the first essay, we estimate trade potentials for southern African countries using the gravity model approach. More specifically, we use the level of infra-regional trade as predicted by the gravity model and compared it with the observed trade in order to assess the trade potentials in the region, as well as the South Africa's trade potentials with its SADC partners. Our results demonstrate that the observed trade flows among SADC countries are largely greater than the ones predicted by the empirical model. We also found that other SADC member countries over-trade with respect to South Africa. However, there are still some unexploited trade potentials for several pairs of SADC countries. The second essay deals with the issue of the choice for the optimal nominal currency anchor to which the national currencies of the region have to be pegged to. Using a panel of 63 countries, we obtained OCA indices à la Bayoumi and Eichengreen for SADC countries vis-à-vis five potential nominal anchor currencies, and we find that the optimal nominal currency anchor for these countries is the US dollar. We also find several pairs of SADC countries which are suitable for a common currency on the basis of the estimated OCA indices. In the last essay, we empirically assess the expandability of the CMA within the SADC by investigating the convergence of monetary policies of each SADC member to that of South Africa, a proxy for CMA. Empirical tests show evidence of long-run relationship between South Africa and two countries, namely Botswana and Mauritius suggesting that these countries may able to follow the leadership of the South African Reserve Bank. Following the results of the Granger-causality test, the leadership hypothesis in the strict sense is rejected for the case of Mauritius and Botswana. However, the only other country which shows evidence of following the South Africa's leadership in terms of Granger-causality is Malawi. [PUBLICATION ABSTRACT].
Author: George S. Tavlas
Publisher:
ISBN:
Category : Africa, Southern
Languages : en
Pages : 60
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Author: Shima Henock Nokaneng
Publisher:
ISBN:
Category :
Languages : en
Pages :
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The objective of the study is to establish how original financial integration could be attained in southern Africa in order to attract more foreign investment and develop a financially robust and stable region in the southern part of Africa: also to deal with the challenges, risks and remedies of prospective future financial crises. Financial markets are rapidly integrating into a single global market. Developing countries of various regions are drawn into the process with little choice, and without having sound financial infrastructure and policies in place. It is against this background that countries and regions of global integration choose policies that would benefit their regional economy and avert potential economic shock. The challenges posed to countries and regions by the progressive global integration of financial markets are becoming more urgent by the day. These challenges need to be addressed more effectively, either nationally or regionally, as demonstrated by the 1998 financial turmoil in Asia. Private capital flows are becoming intra regionally concentrated, particularly in the USA, Europe, Asia and Latin America. Be that as it may, failure in one market is likely to have immediate and large regional repercussions. Globalisation also marginalises Africa and other Least Developed Countries (LDC), leaving them more impoverished and with greater disparities in terms of income, GDP and FDI. Regional financial integration has to be efficient and sound in order to prevent or contain currency and capital market crises in the southern African region. This study identifies macro economic challenges and risks associated with financial integration. Recommendations are made about methodologies of addressing these issues in order to realise the benefits of regional financial integration in southern Africa, which could be a building block in realising the dream of an African Monetary Union. The study contributes greatly to the debate around the most appropriate criteria that are to be met by the SADC countries, before monetary integration can become a reality. A comparison of the benchmark macro economic convergence criteria of the EU and of the African Monetary Union is done and the performance of SADC countries is assessed in terms of both sets of benchmarks. Southern African states are found to not even be at a comparable level with regard to the EU targets of 1997. The thesis is also critical to the impact of the political instability in the SADC region on prospective monetary integration. Most importantly, SADC would be at a permanent disadvantage and face a long-run depreciation of its common currency, should it continue to integrate financially at macro economic benchmark levels inferior to those of its major trading partner, the EU.
Author: G. S. Tavlas
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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With the 14 members of the Southern African Development Community (SADC) having set the objective of adopting a common currency for the year 2018, an expanding empirical literature has emerged evaluating the benefits and costs of a common-currency area in Southern Africa. This paper reviews that literature, focusing on two categories of studies: (1) those that assume that a country's characteristics are invariant to the adoption of a common currency; and, (2) those that assume that a monetary union alters an economy's structure, resulting in trade creation and credibility gains. The literature review suggests that a relative-small group of countries, typically including South Africa, satisfies the criteria necessary for monetary unification. The literature also suggests that, in a monetary union comprised of all SADC countries and a regional central bank that sets monetary policy to reflect the average economic conditions (e.g., fiscal balances) in the region, the potential losses (i.e., higher inflation) from giving up an existing credible national central bank, a relevant consideration for South Africa, could outweigh any potential benefits of trade creation resulting from a common currency.
