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Monetary Integration Initiatives in Eastern and Southern Africa (ESA): Sorting the Overlapping Membership

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  • Steven Buigut

Abstract

Overlaps in membership of monetary integration initiatives in the Eastern and Southern Africa (ESA) region is a major stumbling block to deeper integration. For example, a strict implementation of the East African Community (EAC) customs union concluded in 2004 would violate existing Common Market for Eastern and Southern Africa (COMESA) and Southern Africa Development Community (SADC) free trade agreements. To resolve this problem the paper applies cluster analysis to assign countries to the most suitable monetary union initiative based on real and nominal convergence criteria. The results indicate that the ESA region is not converged enough for an ESA‐wide monetary union. Instead two fairly distinct clusters, one in the southern cone around South Africa and the other around the EAC, are identified. This implies that a two‐track monetary integration route is more appropriate for the region. The EAC is identified as a subgroup within COMESA, suggesting Tanzania should cede SADC membership for COMESA.

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  • Steven Buigut, 2006. "Monetary Integration Initiatives in Eastern and Southern Africa (ESA): Sorting the Overlapping Membership," International Finance, Wiley Blackwell, vol. 9(3), pages 295-315, December.
    • Handle: RePEc:bla:intfin:v:9:y:2006:i:3:p:295-315
    DOI: 10.1111/j.1468-2362.2006.00183.x
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    1. Xavier Debrun & Paul Masson & Catherine Pattillo, 2005. "Monetary union in West Africa: who might gain, who might lose, and why?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(2), pages 454-481, May.
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    4. Steven K. Buigut & Neven T. Valev, 2006. "Eastern and Southern Africa Monetary Integration: A Structural Vector Autoregression Analysis," Review of Development Economics, Wiley Blackwell, vol. 10(4), pages 586-603, November.
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    1. George S. Tavlas, 2009. "The Benefits And Costs Of Monetary Union In Southern Africa: A Critical Survey Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 1-43, February.
    2. Asongu, Simplice & Nwachukwu, Jacinta & Tchamyou, Vanessa, 2017. "A summary of a survey on proposed African monetary unions," MPRA Paper 79637, University Library of Munich, Germany.
    3. Simplice Asongu & Jacinta Nwachukwu & Vanessa Tchamyou, 2017. "A Literature Survey On Proposed African Monetary Unions," Journal of Economic Surveys, Wiley Blackwell, vol. 31(3), pages 878-902, July.
    4. Chee‐Heong Quah & Patrick M. Crowley, 2010. "Monetary Integration in East Asia: A Hierarchical Clustering Approach," International Finance, Wiley Blackwell, vol. 13(2), pages 283-309, August.
    5. Mulatu F. Zerihun & Marthinus C. Breitenbach & Francis Kemegue, 2014. "A Greek Wedding In SADC? Testing For Structural Symmetry Towards SADC Monetary Integration," The African Finance Journal, Africagrowth Institute, vol. 16(2), pages 16-33.
    6. Steven Buigut, 2016. "Trade Effects of the East African Community Customs Union: Hype Versus Reality," South African Journal of Economics, Economic Society of South Africa, vol. 84(3), pages 422-439, September.
    7. Lawrence Edwards & Robert Lawrence, 2008. "SACU Tariff Policies: Where Should They Go From Here?," Growth Lab Working Papers 14d, Harvard's Growth Lab.
    8. Samba Diop & Simplice A. Asongu, 2020. "An Index of African Monetary Integration (IAMI)," Working Papers of the African Governance and Development Institute. 20/003, African Governance and Development Institute..
    9. Buigut, Steven & Valev, Neven T., 2009. "Benefits from Mutual Restraint in a Multilateral Monetary Union," World Development, Elsevier, vol. 37(3), pages 585-594, March.

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