Static Effects of Economic Integration in West Africa: Assessing an impact of Economic Partnership Agreement (EPA) on intra-regional trade

Abstract: In many parts of the world regional economic integration has experienced a revival since the yearly 1990s. That is the reason that the African continent has been drawn and involved itself into this process. An imminent urge to diversify domestic economies has been coupled with the decision to move away from the import-substituting practices in favor of regional integration. West African region and West African Monetary Union are among the main trade agents in Africa. This study uses descriptive statistics in order to analyze whether ECOWAS-EU trade in the context of Economic Partnership Agreement (EPA) in order to see to what extent the intra-ECOWAS bilateral exports are affected. If there is a link between the two, this study would be able to observe a negative correlation. This study finds that direction of export trade flows has seen more trade-creation and trade-diversion in different periods of integration. These are also known to be the static effects of regional integration. Trade creation for economic monetary union occurred more frequently between the 1996 and 2008, which is a situation when more expensive domestic products are replaced with low cost imports of an extra-bloc country. In particular the trend has been obvious during 2000 and 2003 (following the launch of WAEMU in 2000) and in 2006-2007. The intra-ECOWAS export shares face the opposite trade-dynamic, trade diversion, which occurs when cheaper imports from third countries are replaced with more expensive intra-regional imports. Trade diversion for ECOWAS occurred between 2000 and 2001, 2002 and 2003 and 2006 and 2007. Previous findings on the issue of the West African regional intra-trade flows do however suggest negative tendencies for the region where the direction of trade is diverted away with cheaper extra-bloc imports than due to administrative, structural and infrastructural barriers. Although this study does not use various quantitative methods it is more nuanced towards members and non-members of the West African Monetary Union. It also confirms the results of the previous findings that the region experienced more trade diversion rather than trade creation in absolute terms. However this study does not directly observe the worsening of intra-ECOWAS export shares as a direct result of EU-ECOWAS economic cooperation.