Volume 5, Issue 3, September 2020, Page: 130-137
External Economic Shocks and Vulnerability of the West African Economic and Monetary Union
Ibrahima Thiam, Economic and Management Department (UFR SES), University of Thies, Thies, Senegal
Sam Agbahoungba, Economic and Management Department (LAREG), University of Parakou, Parakou, Benin
Received: Jun. 15, 2020;       Accepted: Jul. 7, 2020;       Published: Jul. 23, 2020
DOI: 10.11648/j.jbed.20200503.13      View  27      Downloads  24
Abstract
Background: The regional integration, may it be economic integration or monetary union, is considered, since the success of the European Union, as a mean to development and to mitigate the consequences of exposure to globalization. However, in the African context, the capacity of resilience and the vulnerability of these economies against external shocks remain questionable. Objective: This paper aims to analyze the effects of external economic shocks on the economies of West African Economic and Monetary Union (WAEMU) which is comprised of West African francophone countries (Benin, Cote d’Ivoire, Mali, Niger, Senegal and Togo) and lusophone countries (Bissau Guinea). Method: To achieve this, the Vector Auto Regression technique has been used. We examine the impact of Organization for Economic Cooperation and Development (OECD)’s GDP the price of agricultural commodities, the price of the crude oil barrel, and aid and development assistance shocks on the economies of the union. Due to the lack of data, Bissau Guinea has been removal from the analysis. The data ar primarily sourced from the World Development Indicators and World Economic Outlook databases respectively from the World Bank and the International Monetary Fund and cover the period 1980 – 2018. Results: The results show that the WAEMU countries are highly sensitive to the variations of these different variables with the exception of the price of the crude oil barrel. In addition, the impulse responses show that the WAEMU’s economies are permanently affected by these shocks. Conclusion: In terms of economic policy implications, it is essential to strengthen the insurance mechanisms such as intra-trade through the deepening of the regional integration process, responsible budgetary policy, flexibility of the economies, and the economic convergence for the viability of the union.
Keywords
Economic Shock, WAEMU, Economic Integration, VAR
To cite this article
Ibrahima Thiam, Sam Agbahoungba, External Economic Shocks and Vulnerability of the West African Economic and Monetary Union, Journal of Business and Economic Development. Vol. 5, No. 3, 2020, pp. 130-137. doi: 10.11648/j.jbed.20200503.13
Copyright
Copyright © 2020 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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