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What is Fuzzy About Clustering in West Africa?

  • Mahvash Saeed Qureshi
  • Charalambos G. Tsangarides

Applying techniques of clustering analysis to a set of variables suggested by the convergence criteria and the theory of optimal currency areas, this paper looks for country homogeneities to assess membership in the existing and proposed monetary unions of the broader west African region. Our analysis reveals considerable dissimilarities in the economic characteristics of the countries in west and central Africa. In particular, the West African Monetary Zone (WAMZ) countries do not form a cluster with the West Africa Economic and Monetary Union (WAEMU) countries; and, within the WAMZ, there is a significant lack of homogeneity. Furthermore, when west and central African countries are considered together, we find significant heterogeneities within the CFA franc zone, and some interesting similarities between the Economic and Monetary Community of Central Africa (CEMAC) and WAMZ countries. Overall, our findings raise some questions about the geographical boundaries of several existing and proposed monetary unions.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/90.

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Length: 45
Date of creation: 01 Mar 2006
Date of revision:
Handle: RePEc:imf:imfwpa:06/90
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  1. Alexander W. Hoffmaister, 1997. "Macroeconomic Fluctuations in Sub-Saharan Africa," IMF Working Papers 97/82, International Monetary Fund.
  2. Devarajan, Shantayanan & Rodrik, Dani, 1991. "Do the benefits of fixed exchange rates outweigh their costs? The Franc Zone in Africa," Policy Research Working Paper Series 777, The World Bank.
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  5. Steven K. Buigut & Neven Valev, 2004. "Is the Proposed East African Monetary Union an Optimal Currency Area? A Structural Vector Autoregression Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0407, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  6. Michel Galy & Michael T. Hadjimichael, 1997. "The CFA Franc Zone and the EMU," IMF Working Papers 97/156, International Monetary Fund.
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  15. Devarajan, Shantayanan & Rodrik, Dani, 1991. "Do the Benefits of Exchange Rates Outweigh Their Cost? The Franc Zone in Africa," CEPR Discussion Papers 561, C.E.P.R. Discussion Papers.
  16. Paul Cashin & Catherine A. Pattillo, 2000. "Terms of Trade Shocks in Africa; Are they Short-Lived or Long-Lived?," IMF Working Papers 00/72, International Monetary Fund.
  17. M J Artis & W Zhang, 2001. "Core and Periphery in EMU: A Cluster Analysis," Economic Issues Journal Articles, Economic Issues, vol. 6(2), pages 47-58, September.
  18. Tamim Bayoumi & Jonathan David Ostry, 1995. "Macroeconomic Shocks and Trade Flows within Sub-Saharan Africa; Implications for Optimum Currency Arrangements," IMF Working Papers 95/142, International Monetary Fund.
  19. De Grauwe, Paul & Vanhaverbeke, Wim, 1991. "Is Europe an Optimum Currency Area? Evidence from Regional Data," CEPR Discussion Papers 555, C.E.P.R. Discussion Papers.
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  22. Khamfula, Yohane & Huizinga, Harry, 2004. "The Southern African Development Community: suitable for a monetary union?," Journal of Development Economics, Elsevier, vol. 73(2), pages 699-714, April.
  23. Glenn Milligan & Martha Cooper, 1985. "An examination of procedures for determining the number of clusters in a data set," Psychometrika, Springer, vol. 50(2), pages 159-179, June.
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  25. Elbadawi, Ibrahim & Majd, Nader, 1996. "Adjustment and economic performance under a fixed exchange rate: A comparative analysis of the CFA zone," World Development, Elsevier, vol. 24(5), pages 939-951, May.
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