External Economic Shocks and Vulnerability of the West African Economic and Monetary Union

Ibrahima Thiam; Sam Agbahoungba

doi:doi:10.11648/j.jbed.20200503.13

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External Economic Shocks and Vulnerability of the West African Economic and Monetary Union

Ibrahima Thiam, Sam Agbahoungba

Published in Journal of Business and Economic Development (Volume 5, Issue 3)

Received: 15 June 2020 Accepted: 7 July 2020 Published: 23 July 2020

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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.

Published in	Journal of Business and Economic Development (Volume 5, Issue 3)
DOI	10.11648/j.jbed.20200503.13
Page(s)	130-137
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Economic Shock, WAEMU, Economic Integration, VAR

References

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APA Style

Ibrahima Thiam, Sam Agbahoungba. (2020). External Economic Shocks and Vulnerability of the West African Economic and Monetary Union. Journal of Business and Economic Development, 5(3), 130-137. https://doi.org/10.11648/j.jbed.20200503.13

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ACS Style

Ibrahima Thiam; Sam Agbahoungba. External Economic Shocks and Vulnerability of the West African Economic and Monetary Union. J. Bus. Econ. Dev. 2020, 5(3), 130-137. doi: 10.11648/j.jbed.20200503.13

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AMA Style

Ibrahima Thiam, Sam Agbahoungba. External Economic Shocks and Vulnerability of the West African Economic and Monetary Union. J Bus Econ Dev. 2020;5(3):130-137. doi: 10.11648/j.jbed.20200503.13

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@article{10.11648/j.jbed.20200503.13,
  author = {Ibrahima Thiam and Sam Agbahoungba},
  title = {External Economic Shocks and Vulnerability of the West African Economic and Monetary Union},
  journal = {Journal of Business and Economic Development},
  volume = {5},
  number = {3},
  pages = {130-137},
  doi = {10.11648/j.jbed.20200503.13},
  url = {https://doi.org/10.11648/j.jbed.20200503.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20200503.13},
  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.},
 year = {2020}
}

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TY  - JOUR
T1  - External Economic Shocks and Vulnerability of the West African Economic and Monetary Union
AU  - Ibrahima Thiam
AU  - Sam Agbahoungba
Y1  - 2020/07/23
PY  - 2020
N1  - https://doi.org/10.11648/j.jbed.20200503.13
DO  - 10.11648/j.jbed.20200503.13
T2  - Journal of Business and Economic Development
JF  - Journal of Business and Economic Development
JO  - Journal of Business and Economic Development
SP  - 130
EP  - 137
PB  - Science Publishing Group
SN  - 2637-3874
UR  - https://doi.org/10.11648/j.jbed.20200503.13
AB  - 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.
VL  - 5
IS  - 3
ER  -

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Author Information

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

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Ibrahima Thiam, Sam Agbahoungba. (2020). External Economic Shocks and Vulnerability of the West African Economic and Monetary Union. Journal of Business and Economic Development, 5(3), 130-137. https://doi.org/10.11648/j.jbed.20200503.13

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ACS Style

Ibrahima Thiam; Sam Agbahoungba. External Economic Shocks and Vulnerability of the West African Economic and Monetary Union. J. Bus. Econ. Dev. 2020, 5(3), 130-137. doi: 10.11648/j.jbed.20200503.13

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AMA Style

Ibrahima Thiam, Sam Agbahoungba. External Economic Shocks and Vulnerability of the West African Economic and Monetary Union. J Bus Econ Dev. 2020;5(3):130-137. doi: 10.11648/j.jbed.20200503.13

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@article{10.11648/j.jbed.20200503.13,
  author = {Ibrahima Thiam and Sam Agbahoungba},
  title = {External Economic Shocks and Vulnerability of the West African Economic and Monetary Union},
  journal = {Journal of Business and Economic Development},
  volume = {5},
  number = {3},
  pages = {130-137},
  doi = {10.11648/j.jbed.20200503.13},
  url = {https://doi.org/10.11648/j.jbed.20200503.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20200503.13},
  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.},
 year = {2020}
}

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TY  - JOUR
T1  - External Economic Shocks and Vulnerability of the West African Economic and Monetary Union
AU  - Ibrahima Thiam
AU  - Sam Agbahoungba
Y1  - 2020/07/23
PY  - 2020
N1  - https://doi.org/10.11648/j.jbed.20200503.13
DO  - 10.11648/j.jbed.20200503.13
T2  - Journal of Business and Economic Development
JF  - Journal of Business and Economic Development
JO  - Journal of Business and Economic Development
SP  - 130
EP  - 137
PB  - Science Publishing Group
SN  - 2637-3874
UR  - https://doi.org/10.11648/j.jbed.20200503.13
AB  - 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.
VL  - 5
IS  - 3
ER  -

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