The Impact of the Convergence, Stability and Growth Pact in the WAEMU

Chapter
Part of the Insight and Innovation in International Development book series (IIID, volume 4)

Abstract

In the WAEMU area, nominal convergence is regularly monitored and is the object of increasing interest. However, few studies have focussed on the real convergence of WAEMU countries, and in particular the contribution the Convergence, Stability and Growth Pact (CSGP) has made to the dynamics of real convergence. The goal of this study is to analyse the effect of the pact on the dynamics of real convergence. After examining the concept of sigma-convergence and convergence in distribution, we use the beta-convergence approach with panel data in order to take into account the differences of technological state that exist among the countries. We use the GMM system to correct for the endogeneity bias, and the results suggest that one cannot reject the hypothesis of conditional convergence and that the pact triples the speed of levelling the gap of real per capita GDP in WAEMU member countries for the period 1997–2008. So, adopting the CSGP improved the overall standard of living in the Union’s member countries. The study has, however, some limitations, notably the reduced time dimension and the fact that it did not take into account non-monetary aspects of poverty.

Keywords

Economic Crisis Income Autocorrelation Defend Stake 

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Copyright information

© International Development Research Centre 2012

Authors and Affiliations

  1. 1.Centre for studyresearch and training in Economics and Management of the University of LoméLoméTogo

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