Seventh annual conference on regional integration in Africa (acria 7) July 8-9, 2016 COTONOU, BENIN 08.07.2016 HOTEL SAINT JEAN, COTONOU (BENIN)

08.07.2016 HOTEL SAINT JEAN, COTONOU (BENIN) OBSTACLES TO STRENGTHENING ECONOMIC INTEGRATION IN THE WEST AFRICAN ECONOMIC AND MONETARY UNION Doukouré Charles, FE ENSEA /CAPEC, Abidjan Côte d’Ivoire 08.07.2016 HOTEL SAINT JEAN, COTONOU (BENIN)

Outline Introduction Literature review Methodology Results Conclusion

1. Introduction (1/3) Regional integration should lead to economic growth through the expanding both intra and extra trade. The West African Economic and Monetary Union (WAEMU) has made significant advances on the way of economic integration. But, trade between the members remains low compared to other RECs in sub-Saharan Africa and in the world. Between 2012 and 2014, intra WAEMU trade stagnates between 14% and 15% of the total trade of the area (UNCTAD), 2016.

1. Introduction (2/3) In sub-Saharan Africa, the EAC has respectively 21%, 18% and 18% of intra trade The SADC (the Southern African development community) intra trade represents 18%, 19% and 19% in 2012, 2013 and 2014, respectively. In the rest of the world, ASEAN (Association of Southeast Asia nations) recorded 26%, 26% and 25%; NAFTA (North American free trade agreement) and the EU (European Union) of the 28 are still better with respectively 49%, 49% and 50% and 62%, 61% and 63% of trade between Member countries on the same period (UNCTAD, 2016).

1. Introduction (3/3) WAEMU intra trade , why is it so little ? What are potential obstacles to expand it ? This paper analyzes the potential obstacles to strengthen intra WAEMU exports. It focuses on the impact of economic, political and infrastructural factors on intra WAEMU exports.

2. Literature review (1/3) Economic unions will produce more welfare gains if the share of intra trade in the total trade is larger than the share of trade with the rest of the world (Bhagwati, 1971; Amr, 2013). Analyzing intra infra trade, it appears that many factors slow it down: the infrastructure (Limão & Venables, 2001) , in particular gaps in telecommunications networks and transport, trade policies and economic management (Longo & Khalid, 2004; Francoisa & Manchin, 2007). According to Rodrik (1997), the slow growth of African economies. The trade barriers (Norehan, Hussin, & Hadi, 2014)

2. Literature review (2/3) ….many factors slow it down: The levels and similarities of market size, domestic R&D stock and inward FDI stock (Wang, Wei, & Liu, 2010). the distance between trading countries (Wang, Wei, & Liu, 2010). The institutional quality of both the importer and exporter (Anderson & Marcouiller, 2002; Linders, HL Slangen, De Groot, & Beugelsdijk, 2005; Levchenko, 2007; Francoisa & Manchin, 2007) the economic distortions (Agbodji, 2007)

2. Literature review (3/3) What we do in this paper ? we extend theses previous results taking into account economic, politic stability and infrastructural factors. We follows Longo & Khalid, (2004)

3. Methodology Descriptive statistics : to understand the association between the endogenous variable and the variables of interest Econometric issues : gravity model in panel Data: from 1996 to 2013

3. Methodology: econometric issues Model specification 𝑇𝑟𝑎𝑑𝑒 𝑖𝑗,𝑡 =𝐴 𝐺𝐷 𝑃 𝑖𝑡 𝜃 𝐺𝐷 𝑃 𝑗𝑡 𝜗 𝐷 𝑖𝑗 𝜇 𝑒 𝛾 𝑋 𝑖𝑗𝑡 Equation 1 𝐴 is a function 𝐴 𝑖𝑗,𝑡 = 𝑒 𝛼 𝐹𝐷𝐼 (𝑖,𝑗),𝑡 𝛽 1,2 𝑃𝑆 (𝑖,𝑗),𝑡 𝛽 3,4 𝑅𝐷 (𝑖,𝑗),𝑡 𝛽 5,6 𝑆𝑖𝑚 (𝑖,𝑗),𝑡 𝛽 7,8 𝑀𝑜𝑏 𝑖,𝑡 𝛽 9 𝑀𝑜𝑏 𝑗,𝑡 𝛽 10 Equation 2 Estimation issues

3. Methodology: data Variables Sources of data Goods, Value of exports (TRADE) DOTS Gross Domestic Product (GDP) CNUCED Similarity Index Foreign Direct Investment (FDI) net inflows Political stability Political Stability and Absence of Violence WGI Mobile cellular subscriptions per 100 people WDI Roads, paved, % of total roads

4. Results: descriptive statistics (1/4)

4. Results: descriptive statistics (2/4)

4. Results: descriptive statistics (3/4) Indicators Political stability Political Stability and Absence of Violence Roads, paved, % of total roads Foreign Direct Investment net inflows, in millions US Dollars Mobile cellular subscriptions per 100 people Mean -0.415 18.862 163.96 21.81 Mediane -0.311 17.480 63.714 6.36 Standard deviation 0.696 7.748 209.57 28.91

4. Results: estimations (4/4)

5. Conclusion (1/2) The paper analyzes the obstacles to the strengthening of trade intra WAEMU. It focuses on the economic, political and infrastructural factors in explaining the level of intra WAEMU trade between 1996 and 2013. We estimate an extended gravity model.

5. Conclusion (2/2) The results suggest that the economic similarity, market size, economic growth, FDI net inflows, political stability and absence of violence, percentage of road paved and the proportion of mobile phone subscriber per 100 people are powerful determinants of bilateral trade among WAEMU country members. …

08.07.2016 HOTEL SAINT JEAN, COTONOU (BENIN) Thank you 08.07.2016 HOTEL SAINT JEAN, COTONOU (BENIN)

Seventh annual conference on regional integration in Africa (acria 7) July 8-9, 2016 COTONOU, BENIN 08.07.2016 HOTEL SAINT JEAN, COTONOU (BENIN)