Opening statement
The purpose of this study is to find out whether the economic integration of the central African states leads to mutual benefit. Regional integration in central Africa is still lagging behind due to political, financial, economic and institutional obstacles. Therefore, the paper aims at establishing the measures to address numerous shortcomings like political, economic, institutional and financial obstacles which explain why the regional integration process is still lagging behind in Central Africa region despite its long history and a strong institutional background. Useful components of the ongoing institutional reforms initiated by the Economic and Monetary Community of Central Africa (CEMAC) Heads of State in order to improve its performance and to revamp regional integration in this sub-region are highlighted. Structural measures proposed to boost CEMAC came from a thorough analysis of CEMAC’s performance using SWOT’s methodology.
Background of the study
Regional integration can be described as the formation of economic unions by geographically neighboring countries. It especially involves the formation of preferential trade agreements. It is a procedure in which nations enter into a supranational regional organization to increase regional cooperation and remove regional conflict (Mutharika, 1972). Removal of barriers has been the focus of regional economic integrations in central Africa; with the intention of ensuring that the member states trade freely and also ensuring that goods and labor can be moved freely across the borders of the members. This turns out to be critical as it ensures cordial relationships among the member states, hence reducing chances of conflicts, such as through confidence and security-building measures, and adopting relational regional steps in regards to policy issues (Carbaugh, 2004). Although there might be some differences among the member states in respect to size and economic development, it has been observed that the aim of the economy was to increase economic growth by means of cooperation in trade, development as well as infrastructure (Biswaro, 2003).
Central Africa has been seeking economic integration since colonial times when they were under French colonies. This was with the view to overcoming handicaps and barriers to development, in order to gain from economic integration (DeRosa, 1998). There was high encouragement of the countries to trade with each other and also with the rest of the world. This was aimed at improving productivity and also development economic wise. The CEMAC countries described in this paper include the Central African Republic Cameroon, Chad, Equatorial Guinea, the Republic of Congo, and Gabon (Balassa, 1961). Previously, there have been studies done on this region, and all have reflected on the successes and failures of this integration. The successes or the strengths are based on institutional grounds. This stems from the rivalry between the member states over who is to dominate the region in terms of leadership in the financial markets (Mutharika, 1972).
Prior researches have failed to address the pressing failures of this economic integration. These include insufficient intra-community trade, failure to establish a common market and also issues to do with the free movement of people. They have failed to address the low volume of trade between the countries. Attempts to improve the integration into a common market have also hit a dead-end (Inotai, 1991). Above all, limitation on the free movement of people across the precincts of the member nations has not been addressed well, by prior researches. In light of the above discussion, there are all the reasons to support the undertaking of this study. This is in order to address the gaps left unattended to and lacking solutions by previous studies (Hodgson & Herander, 1983).
Problem statement
This study focuses on the nations which are members of the Central African Economic and Monetary Community (CEMAC). This region of Africa has been striving to create a common market. Members hope that the elimination of all the obstacles to internal trade and cooperation will stretch national markets and eventually improve the standard of living of their citizens. This paper presents a brief historical background of the institution and an overview of some countrys’ views, including the trend and share of resources obtained.
Importance of the study
Past researchers have not succeeded in unraveling the causes of many problems that face regional economic integration. The difficulties include failure to come up with a common market and also matters to do with the free movement of people. They have failed to tackle the low leveled trade between countries. Of all, blocks on the free movement of people across the borders of member states have also not been tackled by past researchers. From the above, there are all the reasons to agree and reinforce this research’s ongoing. In order to tackle the loopholes left without solutions by past studies on the economic region.
Purpose of study
There are many theoretical studies that have touched almost on all the issues of regional integration including those that address the major and most important issue, essential for regional and economic integration. A lot of them have been interested in other regions but not Africa. This study becomes very essential because it has given the focus on the central Africa region in particular. Given that central Africa is trying to enhance its regional integration, this topic becomes relevant and timely. There also exist some unique issues that need individual recognition so as to take this process forward. For instance, is recognizing the essence of regional economic integration in the whole integration process is very critical.
Integrative institutions will be checked on the extent to which they are efficient, especially in terms of the institutional framework for regional economic integration. Another thing noticed is that the sub-regional economic communities (RECs), play a major role as the stem of the regional integration agenda. Due to this, this project will also examine the leading issue of how the current configuration of RECs as the pioneer can be optimized. The essence and necessity for regional economic integration will be transparently shown via the analysis of the merits of such integration.
Some specific areas on which African countries should capitalize will also be emphasized. However, this does not give the implication that this integration does not present obstacles. According to Schiff (2002), new analysis is beginning to concentrate on growing countries. The reason is that countries that are growing are turning to regionalism as development tools, so the efficiency of this plan needs to be assessed. Again, regionalization is part of global economic development and mostly affects growing countries despite the fact that they participate in it. Understanding the implication of this can help them in the betterment and coping with regionalism and capitalize on the merits.
Nature of the study
Design
The method to be used in order to realize the objectives stated earlier on will be qualitative in nature. The study will examine and evaluate the information that is found on the topic. The theoretical background is brought about by the combination of all observations, conclusions on research, evidence and assignments are done relating to the study area. The ethnographic qualitative design will be employed so as to evaluate the study. This technique helps in understanding the economic integration situation in central Africa by describing, analyzing and interpreting all relevant information gathered. The qualitative technique is very essential as it helps to ascertain whether economic integration is endangered through gathering and evaluating negative aspects and benefits of economic integration.
Another method that is used to study the effect of local economic integration on trading matters is the descriptive approach (for example, Anderson & Norheim, 1993; Yeats, 1998; dell’Aquila et al, 1999). Local trade awareness is evaluated by studies using different indicators. It should be noted that the descriptive approach assumes that if the agreement is considered, the trade share in the partner nation cannot be changed. The method depends on a static framework while the level of aggregation determines the results. Welfare implications of RTAs are a result of the descriptive approach lacking the ability to analyze trade creation and its diversion effects.
To describe the importance and difficulty of economic integration in central Africa, the study makes proper use of narrative design. The theory used to explain the state of affairs and facts about the economic integration in the region is accounted for in the narrative. To make the narrative clear, CEMAC is used as a case study to make a good illustration of the subject matter. When the illustration of specified points or results of group or group of projects are much considered, case studies are used as they persuasive and confine the concentration of the reader. However, cases cannot be generalized as they cannot tell whether it is the only example or extensive, regardless of how well they are done.
Research questions
The research questions include whether the increase in trade as a result of economic integration exceeds the costs incurred in its pursuits and whether it actually contributes to regional economic integration. This will make sure that central Africa is on the correct track while it is not misinformed as to whether its efforts and gains of regional integrations have succeeded. It is also essential to ask whether central Africa economies are in a position to acquire maximum gains as a result of regional economic integration. Moreover, it will be important to question what economic and other conditions are available, that serve as challenges in central Africa’s development progress together with regional economic development enhancement and efficiency of this strategy that needs to be monitored. Regionalism is a section of the global economic environment and has a strong impact on developing countries. Regardless of whether or not they participate in it, understanding its implication can help them better cope with regionalism and capitalize on the benefits that accrue to it. It will therefore be essential to ask how the region is impacted upon on the global front, as a result of joining regional economic blocs (Tovias, 1992).
Theoretical or conceptual framework
Viner(1950) and Maede(1955) state that regional economic integrations are explained by several theories which point out that the idea started from the creation of customs unions. In essence, the theoretical ground of conventional steps to regional integration follows three schools of economics and political thinking if backdated. They are found to be non-classical, Marxist and development economics. The theory of economic integration was developed from traditional trade theory originally. This presumes adequate competition whose main concern is in the region of production of goods of a different kind (Imbrani & Reganati, 1994). Biswaro(2003) provided that the oldest theoretical work on regional economic integration came from the theory of comparative advantage in international trade. The concern of liberal economists is enhancing the reduction of tariffs and non-tariff obstacles to trade. The major part of regional economic integration as indicated by the theories is the removal of tariffs and non-tariff obstacles among member states.
Regional economic integration consists of the removal of tariffs and non-tariff obstacles as described in different theories. It also involves the creation of a common external trade policy that enables trade restrictions from those states that are not members, free movement of factors of production, policy harmonization, monetary policy unification, movement of goods and services, and common currency which is acceptable in all the member states. These aspects take place in phases, which include custom unions, free trade area, common market, complete regional integration and economic union.
Regional economic integration is important as it ensures a variety of economic, social and political developments. The majority of the regional integrations are motivated by the prospect of economic growth and prosperity. Different theories have defined regional economic integration with respect to various perspectives, such as economic integration static effects which are based on consumer welfare and economic integration dynamic effects relating to the economic integration of the member states
There is much interest around the stages that the regional integration undergoes because they do not only promote trade but also impose restrictions upon it. Regions that have economic integration blocs enjoy liberalized trade among the members. However, the barriers that result from the integration impose restrictions on the third parties. In this view, the assessment of economic integration becomes very complex, speculative and delicate. Most of the researchers have actually paid attention to the customs union, which is the most more developed compared to other branches under neo-classical theory.
There are five stages of economic integration i.e. free trade area, customs union, common market, economic union and complete regional integration summarized by Balassa (1961). The fact that not all the regional groupings have succeeded, most of them have used this model. A good example is the Southern African Development Community (SADC) which has been scheduled to achieve a free trade area by 2008, a customs union by 2010, a common market by 2015, a monetary union by 2016 and a single currency by 2018. Nonetheless, various opponents have criticized the SADC’s integration targets. An example of a successful regional economic integration and whose model matches with the theory, worldwide, is the EU.
Through lengthy conclusions in the common market, free trade area and preferential agreements, custom union analysis was essential until the late 1960s. Nevertheless, various studies have tried to explain the basis of these stages. Preferential trade agreements play a very critical role in relation to regional economic integration stages.
Schiff and winters (2003) point out that RIAs may impact negatively on the developing countries, hence preventing them from practicing non-discriminatory liberalization and their spirit of cooperating with the multilateral system. Multilateralism is highly affected by regional integration, in addition to the process outcome. As such majority of the regional blocs intend to strengthen their negotiation power with the aim of having some influence on the multilateral trade talks. The level of having negotiation power in a customs union is very much likely to happen. Economic blocs create formalities upon which the members can negotiate more credibly and with a high level of coordination.
Methodology
During the initial stages, the researcher will decide on a sample frame together with a suitable sample size upon which the study will be undertaken in each regional member state. This will as a result produce a practical note for the development of the sampling strategy. The provinces that will be pointed out for the study will be preselected, and the bonders well defined so as to come up with an identifiable population. During the data collection phase, it will be the responsibility of the researcher to come up with a country-specific formula for the sample selection. The researcher will subsequently come up with a final country-specific strategy that will help in an approximation of the sampling weights and establishment of sampling error.
The data collection procedure will be conducted through questionnaires, where the researcher will email the questionnaire and consent forms to the identified respondents within the study region. A period of two weeks will be set for the data collection process. The duly filled-in questionnaires will be obtained at the end of the two weeks period, checked for errors and ambiguity and used to derive information. Useful data will be obtained in the questionnaires received and checked for errors. Several data analysis tools will be utilized. These include computer-based techniques like Microsoft databases and spreadsheets (Meade 1955).
Limitation of the study
In regard to regional integration matter which will be described theoretically, our understanding of the study evidence is particularly insufficient. The gravity model that is used to assess the nature of the regional economic integration has a “fairly long history and fits the data remarkably well empirically, though its theoretical foundations are limited” (Ogunkola, 1994, p.56). It is therefore in order to say that dynamics are lost when the formulation is applied and hence failing to reach a conclusion. In spite of these limitations, the performance of regional integrations in central Africa will be assessed in several studies by Foroutan and Pritchett (1993) and Ogunkola (1994). Despite the slight variance in the studies, there is a similar general conclusion. All the studies provide that the experience of regional integration in Africa have failed to achieve their objectives of enhancing across-border trade, as well as supporting the coordination of policies generally.
Ethical concerns
There is the need to observe some ethical issues since this study entails the use of human beings as respondents. There was the need to obtain consent from the respondents and their organizations before the interviews were conducted so as to ensure that information is obtained intentionally. Prior to the research, all the important details of the research which included the aim and the purpose behind it will be provided to the respondents for them to make an informed decision to participate in the study. There is also a need for anonymity where personal information is not required from the respondents in the process of the interview, as the interview is only interested in their personal opinions. Participants are not required to disclose their names or personal information, as well as the name of the company or any information that can be used to give a definite profile of it. The respondents will be given the freedom to decide the course of the study with an option of withdrawing from the research if they so wish (Imbriani, 1994, p. 335).
Significance of the study
There are enough theoretical studies that have touched almost on all the issues of regional integration, including those that address the major and most important issues, essential for regional and economic integration. Many of them have been interested in other regions but not Africa. The significance of this study is therefore centered on the fact that it is very particular on central African countries, an area which is rarely studied. Generally, the study provides strong insight on the reasons why central Africa economic integration may be failing to achieve its goals, by bringing to light, the major obstacles that face the member states, especially during the implementation of the regional bloc policies. The study is particularly very important as it brings to light, the importance of promoting the regional blocs with the aim of fostering peaceful co-existence. As such, the study will uncover the manner in which regional coordination can help stamp out conflicts within the region.
References
Anderson, K., & Norheim, H. (1993). Is World Trade Becoming More Regionalized? Review of InternationalEconomics 1.
Balassa, B. (1961). The theory of economic integration. London: George Allen and Unwin.
Biswaro, J.M. (2003). Perspectives on Africa’s integration and cooperation from OAU: old wine in a new bottle. Washington: WIU.
Carbaugh, R. J. (2004). International Economics, 9th edition. Sydney: Thomson South-Western.
dell’Aquila, C., Sarker, R., & Meilke, K. (1999). Regionalism and Trade in Agrifood Products. London: International Agricultural Trade Research Consortium.
DeRosa, D. A. (1998). Regional Integration Arrangements: Static Economic Theory, Qualitative Findings, and Policy Guidelines. The USA. World Bank Policy Research Report.
Foroutan, F., & Lant, P. (1993). Intra-Sub-Saharan African Trade: is it too Little?, Journal of African Economies, 2(1), 74-105.
Hodgson, J.S. & Herander, M.G. (1983). International Economic Relations. New Jersey: Prentice Hall International Inc.
Imbriani, C. & Reganati, F. (1994). International production and economic integration: Toward economic convergence. Economia Internazionale, 47 (4), 333‐349.
Inotai, A. (1991). Regional Integration among Developing Countries Revisited. Washington: World Bank, Country Economics Department.
Meade, J.E. (1955). The theory of Customs Unions. Amsterdam: North‐Holland.
Mutharika, B.W.T. (1972). Towards Multinational Economic Cooperation in Africa. New York: Praeger Publishers.
Ogunkola, E. O. (1994). An Empirical Evaluation of Trade Potential in the Economic Community of Western States. Nairobi: AERC Research Paper.
Schiff, M. (2002). Regional Integration and Development in the Small States. Washington DC: World Bank, Development Research Group Trade.
Schiff, M. & Winters L.A. (2003). Regional Integration and Development. Washington D.C: The International Bank for Reconstruction and Development/ World Bank and Oxford University Press.
Tovias, A. (1992). The theory of Economic Integration: Past and Future. Web.
Viner J. (1950). The Customs Union Issue. Carnegie Endowment for International Peace. New York: SAGE
Yeats, A.J. (1997). Does MERCOSUR’s Trade Performance Raise Concerns about the Effects of Regional Trade Arrangements? World Bank Economic Review, 12(1).