Transcript Regional preference within Africa?
Regional preference within Africa?
• Africa's non-oil exports are concentrated in a few products, none of them important regional imports. • There is relatively little intra-African trade and the mismatch between African exports and imports cannot quickly change. • Moreover, intra-African trade is highly concentrated, geographically, with almost no trade between East and West Africa.
• This finding makes less compelling the arguments that regional trade can help overcome problems of small domestic markets.
• Giving preference to imports from other African countries risks making your own exports uncompetitive in the world market • In short, regional trade agreements seem to present Africa with a "lose-lose" situation.
Yeats, 1998
Exchange rate regimes: the shift from the centre Fischer 2001
Fischer, 2007
Rigid or inflexible regimes can be crisis-prone
Especially if capital market is open
If you want to peg your currency, you should have
(i) low capital mobility; (ii) (iii) (iv) (v) (vi) (vii) a high share of trade with the country to which it is pegged; the shocks it faces are similar to those facing the country to which it pegs; it already relies extensively on its partners' currency; fiscal policy is flexible and sustainable; its labor markets are flexible; it has high international reserves. (Mussa et a. 2000)