Economic and Monetary Unions, Regional Trade and Integration

This dissertation examines the Economic and Monetary Unions and how the establishment of West African Economic and Monetary Union (WAEMU) contributes to regional trade promotion and integration. More specifically, it explores the effect of West African currency (CFA) on trade. Within WAEMU members, there are some countries who are more open to trade than others and also benefit more from the membership. Countries like Mali, Senegal and Togo can be given as examples. Empirical findings using gravity model suggests that countries sharing the same currency - West Africa CFA ¿ trade over two times (2.23) as much between them than with others which is economically meaningful and statistically significant. In addition, we find that the privileged trade partner of WAEMU countries are Asian countries with whom they trade more than three times (3.67) than with the rest of the world. Furthermore, we find a strong evidence showing that contiguity and historical and cultural links encourage bilateral trade and regional integration. It is observed that countries sharing historical and cultural links trade 51.7% more with each other.