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Does Monetary Integration Lead to Income Convergence in Africa? A Study of the CFA Monetary Area

Author

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  • Souleymane Ndao

    (CRIISEA - Centre de Recherche sur les Institutions, l'Industrie et les Systèmes Économiques d'Amiens - UR UPJV 3908 - UPJV - Université de Picardie Jules Verne)

  • Nikolay Nenovsky

    (CRIISEA - Centre de Recherche sur les Institutions, l'Industrie et les Systèmes Économiques d'Amiens - UR UPJV 3908 - UPJV - Université de Picardie Jules Verne)

  • K. Tochkov

Abstract

The CFA franc area is one of the oldest currency unions, but it has come under intense criticism recently for failing to promote economic growth and income convergence between member states. This paper examines the growth experience of the 14 member countries relative to a common benchmark over the period 1960\textendash 2011. In particular, we use a combination of parametric and non-parametric methods to study convergence patterns as well as growth dynamics and to identify the factors responsible for changes in relative per-capita income. The results indicate divergence tendencies that result in a bimodal distribution in the long run. The sharp devaluation of the CFA franc in 1994 increases intradistributional mobility which is directed towards lower income levels. The regression analysis suggests that openness, FDI, and financial development have a positive and robust effect on convergence in the currency union. \textcopyright 2018, ISEG.

Suggested Citation

  • Souleymane Ndao & Nikolay Nenovsky & K. Tochkov, 2019. "Does Monetary Integration Lead to Income Convergence in Africa? A Study of the CFA Monetary Area," Post-Print hal-03680623, HAL.
    • Handle: RePEc:hal:journl:hal-03680623
    DOI: 10.1007/s10258-018-0150-8
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    References listed on IDEAS

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    Cited by:

    1. Souleymane NDAO & Nikolay Nenovsky, 2020. "External Dependence of the African Franc CFA zone. Empirical Investigations on Money Supply Process," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 357-367, September.
    2. Moustapha Aman & Nikolay Nenovsky, 2022. "Monetary stability and regional currency board: towards a two-tier system to accelerate regional integration in the Horn of Africa: a policy proposal," Working Papers hal-04084421, HAL.

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    More about this item

    JEL classification:

    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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