**4. A reconsideration of the evidence: unsettled issues**

We have argued elsewhere that there still exist unsettled matters concerning progress towards economic integration in the sub-region via WAMZ [7]. These include the following:


*Economic Integration in West Africa: A Reconsideration of the Evidence DOI: http://dx.doi.org/10.5772/intechopen.86655*


• Risk of exchange rate crisis. How stable would the accepted and unified

US dollar and the British pound, among others.

*Regional Development in Africa*

could be caught up in a funding problem' ([3], p. 35).

recessionary phase of the economies in the zone.

twin deficits would be unhealthy for the zone.

**4. A reconsideration of the evidence: unsettled issues**

US\$5.95 billion (1.10 percent of GDP) in 2015.

the integration process.

include the following:

**90**

• Loss of potency of instrument of automatic stabilizer. With the high

vulnerability of Member States to shocks, it becomes doubtful whether the budget could serve as an instrument of automatic stabilizer especially in a

• Risk of debt overhang and sovereign debt crisis. A sharp decline in commodity exports as a result of a shock may result in sharp decline in revenue resulting in current account imbalances and potential domestic fiscal deficits. The resultant

The inconsistency in meeting the primary and secondary criteria for convergence overtime suggests the need to stress other economic variables. It would be extremely difficult if not impossible for all the member countries to meet the criteria at the same time. The evidence from 2001 to 2016 confirms this position. Consequently, it may desirable to consider point convergence and/or convergence by two big economies in the zone in addition to other factors in order to push ahead

We have argued elsewhere that there still exist unsettled matters concerning progress towards economic integration in the sub-region via WAMZ [7]. These

• Increased intra-WAMZ trade. Trade among member countries increased very marginally between 2015 and 2016. Intra-WAMZ trade improved to US\$2.8 billion (0.71 percent of GDP), from US\$1.6 billion (0.30 percent of GDP), reflecting increases in The Gambia, Nigeria and Sierra Leone. The degree of intra-WAMZ trade relative to the rest of the world rose to 2.6 percent, from 1.2 percent in the previous year. While The Gambia, Nigeria and Sierra Leone recorded improvements in intra-WAMZ trade, Ghana, Guinea and Liberia posted declines. WAMZ Member States trade with the rest of ECOWAS declined to US\$3.09 billion (0.80 percent of GDP) in the review period, from

• There are still challenges when it comes to free movement of goods and services. This is more pronounced during road transport. Traders and nontraders go through 'hell' when traveling by road in the sub-region. It seems the customs and immigration officers do not know of existing protocols. Several

unnecessary road blocks hinder free flow of goods and services.

currency be? There are issues of convertibility to global currencies such as the

• Likelihood of banking crisis. 'In the event of adverse shock from the external environment, which affect output and hence the tax base of the issuing country, the incentives to default could be high. Under this scenario, investors would want to pull out from the domestic bond market, a development that would elicit increase in interest rate on government bonds. Since domestic banks are the main investors in the domestic sovereign bond market, the banks


France pose significant matters to be addressed. The political dimension vis-à-vis the work of the technocrats needs to be reconciled as the sub-region moves towards

Based on the issues examined above, economic integration is not a smooth journey. The experience of Europe is worth emulating. The Heads of State and Government must strive to address the unsettled issues discussed above. Within that context, point convergence as well as two or three big economies in the region

**Countries 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015**

Ghana 1 0 2 1 3 2 2 0 2 3 3 3 2 1 2 Guinea 3 2 0 0 2 1 2 1 1 0 2 2 2 2 1 Liberia NA NA NA NA NA NA 1 2 4 3 3 3 3 3 3 Nigeria 3 3 2 3 3 4 4 3 3 2 3 3 4 4 4

2 1 1 3 3 4 44 4 43322 1

2 2 02 2 2 2 2 1 1 1243 3

may jump start the integration process for other economies to join later.

The preliminary panel regression provides mixed results regarding the relationship between economic growth, inflation and private investment, among others, from 1980 to 2017. Both the economics and politics of economic integration must be considered as the movement towards a monetary union

*Economic Integration in West Africa: A Reconsideration of the Evidence*

*DOI: http://dx.doi.org/10.5772/intechopen.86655*

economic integration.

progresses.

**A. Appendix**

The Gambia

Sierra Leone

**Table A1.**

*Source: WAMI, Annual Report and Statement of Accounts.*

*Source: WAMI, Annual Report and Statement of Accounts (various issues).*

*Number of primary convergence criteria met by Member States (2001–2015).*

*Member States' deviation from inflation threshold.*

**Table A2.**

**93**

*threshold, while a positive value implies a country is above the threshold.*

*The inflation threshold used for computing the deviation is 9.9 percent. A negative value means a country is within the*

#### **Table 8.**

*Regression results. Dependable variables:Yg Number of observations: 304Method: Least squares (panel)Period: 1980–2017Fixed effects*


Furthermore, we examined the relationship between economic growth and relevant economic variables for the period of 1980–2017. After almost 43 years at economic integration effort, what has been the precise link between capital expenditures, openness, broad money supply, private investment and inflation to growth? The results are presented in **Table 8**.

$$R^2.0.14; F(7, 290) = 3.25;\tag{2}$$

Yg = growth of GDP; *<sup>m</sup>*<sup>2</sup> *<sup>Y</sup>* = broad money supply; gcf = gross capital formation (private investment); Infant mort = infant mortality rate; Inf = inflation; Openness = openness; Cag = capital expenditure (public investment).

The regression results indicate that broad money supply, inflation and infant mortality (a proxy for capturing development) are negatively related to growth and are statistically significant at 5 percent and 10 percent, respectively. Openness, gross capital formation and capital expenditures are positively related and statistically significant. The properly signed openness variable indicates the importance of trade in the sub-region. The explanatory power is weak; hence the results need to be interpreted with caution.

It should be noted that some of the variables, for example, delinking with France, discussed above cannot be captured in the regression due to lack of data.
