IDEAS home Printed from https://ideas.repec.org/a/bla/agecon/v33y2005is3p411-421.html
   My bibliography  Save this article

Potential impacts of the proposed West African monetary zone on cowpea trade

Author

Listed:
  • Augustine S. Langyintuo
  • J. Lowenberg‐DeBoer
  • Channing Arndt

Abstract

Member countries of the Economic Community of West African States (ECOWAS) are expected to form a West African Monetary Zone (WAMZ) by December 2009, whereby members would use a common currency in an attempt to promote regional integration. Evidence suggests that reduction in transaction cost as a result of a decrease (or elimination) of nontariff barriers (NTBs) and real interest rates in response to elimination of exchange rate differentials positively influence trade. The objective of this study is to quantify the effects of (a) a 7% real interest rate on capital and (b) zero NTBs within ECOWAS countries, on cowpea (Vigna unguiculata (L.) Walp) trade to provide a measure of the potential impacts of the WAMZ on grain trade. The study applies a spatial and temporal price equilibrium model formulated in a mixed complementary programming (MCP) framework and solved using GAMS/PATH. The focus is on the Nigerian cowpea grainshed (NCG) comprising Benin, Burkina Faso, Côte d'Ivoire, Ghana, Mali, Niger, Nigeria, and Togo in ECOWAS, and Cameroon, Chad, and Gabon in the Central African Economic and Monetary Community (CAEMC). The results show that if WAMZ results in reduced real interest rates within ECOWAS, the larger of the two monetary unions, consumers in the relatively larger coastal economies and producers in the smaller Sahelian economies would benefit while all others lose. However, net social welfare would increase by 0.19% over the base case of 6.3 billion US$ (bUS$). Removing NTBs among countries in the larger trading bloc may alter the pattern of cowpea flows with total trade volume increasing by 3%, but inter‐bloc trade decreasing by about 8%. The net total regional social welfare would increase by 0.14%, or 15 million US$ (mUS$), benefiting only consumers in importing countries and producers in exporting countries. The results emphasize the importance of specialization based on regional comparative advantage, but also draw attention to the need to devise ways to ensure acceptable welfare distribution among producers and consumers in line with policy objectives of the individual countries within the proposed WAMZ. Finally, this article contributes to the literature on the application of spatial and temporal models incorporating both ad valorem tariffs and differential interest rates in developing economies.

Suggested Citation

  • Augustine S. Langyintuo & J. Lowenberg‐DeBoer & Channing Arndt, 2005. "Potential impacts of the proposed West African monetary zone on cowpea trade," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 411-421, November.
    • Handle: RePEc:bla:agecon:v:33:y:2005:i:s3:p:411-421
    DOI: 10.1111/j.1574-0864.2005.00463.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1574-0864.2005.00463.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1574-0864.2005.00463.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ms. Catherine A Pattillo & Mr. Paul R Masson, 2001. "Monetary Union in West Africa (ECOWAS)," IMF Occasional Papers 2001/003, International Monetary Fund.
    2. Honohan, Patrick & Lane, Philip R., "undated". "Will the Euro Trigger More Monetary Unions in Africa?," WIDER Working Papers 295503, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    3. International Monetary Fund, 2001. "West African Economic and Monetary Union (WAEMU): Recent Economic Developments and Regional Policy Issues in 2000," IMF Staff Country Reports 2001/193, International Monetary Fund.
    4. Torsten Persson, 2001. "Currency unions and trade: how large is the treatment effect?," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 16(33), pages 434-448.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Patrick L. Hatzenbuehler & Philip C. Abbott & Tahirou Abdoulaye, 2017. "Price Transmission in Nigerian Food Security Crop Markets," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 143-163, February.
    2. Fulgence Joseph Mishili & Joan Fulton & Musa Shehu & Saket Kushwaha & Kofi Marfo & Mustafa Jamal & Alpha Kergna & J. Lowenberg-DeBoer, 2009. "Consumer preferences for quality characteristics along the cowpea value chain in Nigeria, Ghana, and Mali," Agribusiness, John Wiley & Sons, Ltd., vol. 25(1), pages 16-35.
    3. Langyintuo, Augustine S., 2010. "Grain Distribution in Ghana under Imperfectly Competitive Market Conditions," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96166, African Association of Agricultural Economists (AAAE).
    4. Daniel Simons & Rosmy Jean Louis, 2018. "Monetary union in West Africa and business cycles synchronicity: New evidence," The World Economy, Wiley Blackwell, vol. 41(10), pages 2828-2848, October.
    5. Magen, Benjamin B., 2012. "An Ex Post Economic Impact Assessment of Bean/Cowpea Crsp’s Investment on Varietal Development in Senegal," Graduate Research Master's Degree Plan B Papers 142739, Michigan State University, Department of Agricultural, Food, and Resource Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Langyintuo, Augustine S. & Lowenberg-DeBoer, James & Arndt, Channing, 2003. "Potential Impacts Of The Proposed West African Monetary Zone On Cowpea Trade In West And Central Africa," 2003 Annual meeting, July 27-30, Montreal, Canada 22236, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. John Hawkins & Paul Masson, 2003. "Economic aspects of regional currency areas and the use of foreign currencies," BIS Papers chapters, in: Bank for International Settlements (ed.), Regional currency areas and the use of foreign currencies, volume 17, pages 4-42, Bank for International Settlements.
    3. Agnès Bénassy‐Quéré & Maylis Coupet, 2005. "On the Adequacy of Monetary Arrangements in Sub‐Saharan Africa," The World Economy, Wiley Blackwell, vol. 28(3), pages 349-373, March.
    4. Aaron Jackson & William Miles, 2008. "Fixed Exchange Rates and Disinflation in Emerging Markets: How Large Is the Effect?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(3), pages 538-557, October.
    5. I.Igal Magendzo, 2002. "Are Devaluations Really Contractionary?," Working Papers Central Bank of Chile 182, Central Bank of Chile.
    6. Michael Artis, 2008. "What do we now know about currency unions?," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 1(1), pages 13-29.
    7. Michele FRATIANNI & Chang HOON HO, 2007. "On the Relationship Between RTA Expansion and Openness," Working Papers 288, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    8. John Thornton & Chrysovalantis Vasilakis, 2018. "Fiscal Rules And Government Borrowing Costs: International Evidence," Economic Inquiry, Western Economic Association International, vol. 56(1), pages 446-459, January.
    9. Sethi, Chandan & Mishra, Bibhuti Ranjan & Sethi, Dinabandhu, 2024. "Exploring the nexus between inflation targeting and exchange market pressure: Evidence from the global financial crisis," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1359-1369.
    10. repec:got:cegedp:112 is not listed on IDEAS
    11. Adjasi, Charles K.D. & Kinful, Emmanuel, 2008. "Trade policies and development in Africa: The Doha Development Agenda, the EU EPAs and ECOWAS," Conference papers 331739, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    12. Alberto Alesina & Silvia Ardagna & Vincenzo Galasso, 2011. "The Euro and Structural Reforms," Review of Economics and Institutions, Università di Perugia, vol. 2(1).
    13. Robert Barro & Silvana Tenreyro, 2007. "Economic Effects Of Currency Unions," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 1-23, January.
    14. Yasser Abdih & Charalambos Tsangarides, 2010. "FEER for the CFA franc," Applied Economics, Taylor & Francis Journals, vol. 42(16), pages 2009-2029.
    15. Léonce Ndikumana, 2003. "Capital Flows, Capital Account Regimes, and Foreign Exchange Rate Regimes in Africa," Working Papers wp55, Political Economy Research Institute, University of Massachusetts at Amherst.
    16. Radhika Pandey & Gurnain K. Pasricha & Ila Patnaik & Ajay Shah, 2021. "Motivations for capital controls and their effectiveness," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 391-415, January.
    17. Mark J. Holmes, 2005. "Is Long-Run Output Convergence Associated With International Cooperation? Some New Evidence For Selected African Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(2), pages 67-85, December.
    18. Petr Rozmahel & Ladislava Issever Grochová & Marek Litzman, 2014. "The Effect of Asymmetries in Fiscal Policy Conducts on Business Cycle Correlation in the EU. WWWforEurope Working Paper No. 62," WIFO Studies, WIFO, number 47249, July.
    19. Maurel, Mathilde, 2004. "Current account constraint as a barrier to international trade: the evidence from the European enlargement process?," Economic Systems, Elsevier, vol. 28(3), pages 301-317, September.
    20. Cerqua, Augusto & Montalbano, Pierluigi & Temerbulatova, Zhansaya, 2024. "A decade of Eurasian integration: An ex-post non-parametric assessment of the Eurasian economic union," International Economics, Elsevier, vol. 178(C).
    21. repec:ptu:bdpart:b200410 is not listed on IDEAS
    22. Bekaert, Geert & Harvey, Campbell R. & Lundblad, Christian T. & Siegel, Stephan, 2013. "The European Union, the Euro, and equity market integration," Journal of Financial Economics, Elsevier, vol. 109(3), pages 583-603.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:agecon:v:33:y:2005:i:s3:p:411-421. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.