Costs and Benefits of Monetary Union: A Pedagogical Note

The primary motivation for establishing a monetary union (MU) derives from the desire to deepen an existing regional integration arrangement. This study examined the costs and benefits of MU. Generally, the benefits of MU accrue from macroeconomic efficiency gains such as reduced transactions costs; increased competition; reduced risks and uncertainty; and policy credibility enhancement. However, the costs relate largely to the macroeconomic management difficulties occasioned by loss of national monetary and exchange rate policy autonomy.Given a range of structural differences among countries contemplating the establishment of a MU, it is advisable for each to conduct a cost-benefit analysis or delay the decision to join until appropriate convergence criteria are met and an explicit cost-benefit sharing scheme designed. The benefits of monetary union are most effectively exploited when all the other key ingredients of economic integration have already been established and fully functioning

China–Africa Trade Relations: Insights from AERC Scoping Studies

Cet article analyse l'impact des relations commerciales entre la Chine et l'Afrique, tant au niveau régional que national, à travers un échantillon de pays. Il confirme que ces relations commerciales donnent lieu tant à des gains qu'à des pertes. Au delà de cette constatation, l'article souligne que la structure existante des échanges entre l'Afrique et la Chine – renforcée par l'envergure croissante de la place occupée par la Chine – ne sert pas les objectifs de l'Afrique à plus long terme. Autrement dit, ces échanges ne contribuent pas à une diversification de la structure économique et commerciale de la région, et n'assure donc pas l'objectif de développement industriel de pays africains. Cet article suggère que, dans beaucoup de cas, les effets négatifs des relations commerciales entre la Chine et l'Afrique peuvent être plus importants que les effets positifs. En conséquence, des décisions politiques concertées devraient être prises, décision qui soient bien adaptées aux circonstances spécifiques de chaque pays. De façon générale, ces décisions consisteraient de mesures politiques visant le renforcement de l'accès des économies africaines au marché chinois ainsi que l'élimination des contraintes de capacité de production.European Journal of Development Research (2009) 21, 485–505. doi:10.1057/ejdr.2009.28

Exchange rate volatility and export trade in Nigeria: an empirical investigation

This article seeks to quantitatively assess the impact of exchange rate volatility on nonoil export flows in Nigeria. Theoretically, volatility-trade link is ambiguous, although a strand of studies reported inverse link between export flow and volatility. This article employed fundamental analysis where the flow of nonoil exports from the Nigerian economy is assumed to be predicated on fundamental variables: the naira exchange rate volatility, the US dollar volatility, Nigeria's Terms of Trade (TOT) and Index of Openness (OPN). Empirical results showed the presence of unit root at level; however, the null hypothesis of nonstationarity was rejected at first difference. Cointegration results revealed that a stable long-run equilibrium relationship exists between nonoil exports and the fundamental variables. Using quarterly observations for 20 years, vector cointegration estimate revealed that the naira exchange rate volatility decreased nonoil exports by 3.65%, while the same estimate for the US dollar volatility increased export of nonoil in Nigeria by 5.2% in the year 2003. This article recommends the measures that would promote greater openness of the economy and exchange rate stability in the economy.