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Southern African Economic Integration: Evidence from an Augmented Gravity Model

Author

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  • Warin, Thierry

    (Middlebury College)

  • Wunnava, Phanindra V.

    (Middlebury College)

  • Tengia, Optat

    (Brown University)

  • Wandschneider, Kirsten

    (Occidental College)

Abstract

This paper investigates the feasibility of creating a common-currency union consisting of 16 countries in Southern Africa. We estimate an augmented-gravity model that includes public deficit, public debt, public expenditure, inflation, and the foreign reserves position. We also integrate Africa-specific variables such as existing economic blocs in the region, colonial heritage, and the convergence of living standards. Our analysis shows that the prospect for further integration in Southern Africa is promising, but many challenges still persist. The existing economic blocs can provide a first stepping stone to a larger currency union, but countries continuously have to cultivate good governance and fiscal discipline.

Suggested Citation

  • Warin, Thierry & Wunnava, Phanindra V. & Tengia, Optat & Wandschneider, Kirsten, 2009. "Southern African Economic Integration: Evidence from an Augmented Gravity Model," IZA Discussion Papers 4316, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4316
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    Cited by:

    1. Sylvanus Kwaku Afesorgbor & Peter A. G. Bergeijk, 2014. "Measuring Multi-Membership in Economic Integration and Its Trade Impact: A Comparative Study of ECOWAS and SADC," South African Journal of Economics, Economic Society of South Africa, vol. 82(4), pages 518-530, December.
    2. Alfred Moyo, 2019. "Evaluating the impact of global oil prices on the SADC and the potential for increased trade in biofuels and natural gas within the region," WIDER Working Paper Series wp-2019-36, World Institute for Development Economic Research (UNU-WIDER).
    3. Fahimifard , Seyed Mohammad, 2013. "Studying Iranian Economic Integration with OIC Members Using Gravity Model," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 8(1), pages 169-181, January.
    4. Afesorgbor, Sylvanus Kwaku & van Bergeijk, Peter A.G., 2011. "Multi-membership and effectiveness of regional trade agreements in Western and Southern Africa: a comparative study of ECOWAS and SADC," Proceedings of the German Development Economics Conference, Berlin 2011 1, Verein für Socialpolitik, Research Committee Development Economics.
    5. Alain Dudoit & Molivann Panot & Thierry Warin, 2021. "Towards a multi-stakeholder Intermodal Trade-Transportation Data-Sharing and Knowledge Exchange Network," CIRANO Project Reports 2021rp-28, CIRANO.

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    More about this item

    Keywords

    optimum currency area; gravity model; Southern African integration; endogenous optimum currency area theory;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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