Faced with Political and Economic Problems Facing the African Continent in General And

1. Introduction

Faced with political and economic problems facing the African continent in general and Central Africa in particular, regional integration must be a solution to any concern for development. Broad and rather complex notion of regional integration can be defined as a mechanism for developing countries, individually or collectively, it is a facilitator tool for countries to allow Africa to become an industrial center and out of the shackles of chronic current against imported products and provider of commodity dependence. Dealing with the local processing of raw materials becomes a necessity. Viewed from this perspective, regional integration facilitates the sharing of experiences to promote and support the achievement of economies of scale for the rational exploitation of resources has our different countries. It's a possibility that gives CEMAC countries to become a respectable, credible and essential partner in the process of integration of world economies. Thus, regional integration is a hope for the development of Africa. To this end how to measure training effects of this regional integration on the economic performance of countries in the sub-region? How to present the picture of the trade balance by country? It will be in this study to examine the various possibilities offered by that regional integration for CEMAC countries through a statistical description based on data from the World Bank.
An estimate of the effects of CEMAC in Cameroon's economic potential will also be done through the estimation of imports based on gross national income and domestic and import prices.

Study Objective: To measure the effect of regional integration (CEMAC) on the performance of member countries.

Assumptions:
H1: Regional integration (CEMAC) promotes economic growth;

H2: The political, financial and economic crises in member countries negatively influence the level of integration of the regional integration;

H3: The effects of integration in the CEMAC zone less influence the performance of member countries.

Abstract
Confined in a narrow socio-economic space, African states have noted the need to go beyond their national sovereignty by encouraging for most African Unity. In addition, much remains to be carried out under political instability phenomena that hinder the economic development of some countries. The challenge of development is an issue that arises in a world where globalization is becoming increasingly urgent. Regional integration is the key to that effect economic development issues that are facing our country. This idea in view of the size of the CEMAC area would be set which, on the scale of a single state would have been difficult or impossible to achieve. The countries of the CEMAC zone are facing a multitude of issues: political stability, sustained economic growth, reduction in the volume of imports, processing of natural resources, etc. One response to these concerns may reflect numerous in regional integration as a main objective of development. In this study we identified the effects of regional integration in the CEMAC zone in the specific performance of Member States. For this purpose, the method of analysis adopted was the econometric analysis of exports and imports outside CEMAC member countries. The results show that the integration in the CEMAC zone did not significantly influenced the volume of imports / exports of member countries. These results lead to fundamental questions about the effectiveness of the integration between the member countries.

Keywords: Regional Integration, CEMAC, political stability, economic growth, natural resource development.

1. Regional integration in the CEMAC zone: the potential of countries in the region

Difficult to know that Central Africa has an economy dominated by the political instability and poverty all the more shocking when one recognizes in it many potential in terms of natural resources. Regional integration to correct these negative factors to growth should marry dimensions political, social and economic. Enhance economic efficiency and political sub-region, improve the production process, bridging cultures and even change behaviors become essential major challenges of regional integration should face. To do this there is the potential of member countries.

1. Performance of countries in the CEMAC zone

As CEMAC Economic and Monetary Community of Central Africa was signed on 16 March 1994. She replaces CACEU (the Customs and Economic Union of Central Africa), which emerged in 1964. CEMAC is to: (i) to establish a union more among the peoples of Member States to strengthen their geographical and human solidarity, (ii) promote national markets by removing barriers to intra-Community trade, coordination of development programs, the harmonization of industrial projects, and (iii) to develop solidarity of the member countries for the benefit of disadvantaged countries and regions, (iv) to create a true African common market. It includes six countries of Central Africa: Cameroon, Gabon, Congo, Central African Republic, Equatorial Guinea and Chad.

The estimated effects of regional integration on the performance of the CEMAC are centered in the first part of the analysis of some indicators of economic performance in the CEMAC zone. It will conduct an analysis of: (i) the evolution of real GDP CEMAC trend and cycle, and (ii) the level of the trade balance through exports / imports.
Analysis data are drawn from the database of the World Bank.
Analyses were made on the period 1980-2011 and for handling missing data for some variables we used the method of imputation, imputation growth.

Gdpt +1 = (1 + a) GDPtwith a growth rate of GDP between time t and t +1

The other missing for variables such as exports, imports data were imputed using the average of two consecutive periods.

The variables used are:

Real GDP in the CEMAC (PIB);

the trade balance of the country i (Balance_i);

exports of country i (export_i);

imports of country i (import_i);

Report on national awards import prices of country i (Rpdpi_i).

1. Analysis of real GDP in the CEMAC

Figure 1: Evolution of GDP in trend and cycle

Source: World Bank and our calculations on Eviews

The actual production of the CEMAC had a sluggish growth of 3.5% on average during the study period, many changes are observed; these marked by periods of growth (1980-1986) and (1996 - 2011) and periods of decline (1987-1995). However, the study period can be divided into three.

Period 1: 1980-1986

It is characterized by an average growth target of around 6.3% and represents a period of strong economic growth. This growth is mainly due to good rainfall in the countries of the area, which has favored the satisfactory results of Agriculture and a slight improvement in terms of trade. It is also favored by the commodity boom over the period which induces a shock to demand by improving revenue.

Period 2: from 1987 to 1995

During this period, the growth rate dropped to an average annual rate of about 1.1%. The first part of this period saw the implementation of the stabilization program, while the second part, beginning in 1990, marks the beginning of the implementation of Structural Adjustment Programmes (SAPs) in the majority of countries of the CEMAC in general and Cameroon in particular. The fall in the growth rate and promotes the devaluation of the CFA franc in 1994.

Period 3: from 1996 to 2011

Actual production is growing at a relatively low rate averaged at 4.6%. This renewed growth after the recession of 1987-1994 was to a lesser extent by the January 1994 devaluation but also NOT have improved the performance of CEMAC performance partly due to favorable conditions development of private initiative. Growth for the period 2000-2011 is attributed to the implementation of structural reforms in several countries of the CEMAC and also global growth.

Cyclical fluctuations of real GDP growth in the CEMAC as presented in Figure 1 suggest that the economic system of the area can be divided into three periods of cyclical downturn: 1986-1994, 1998-2003 and 2005-2009 three periods of cyclical expansion: 1980-1996 and 1994-1998 and 2009-2011. In the last phase of cyclical expansion of 2009-2011 is especially trend GDP progressing and deviations of real actual GDP around the trend GDP are quantitatively less significant.

1. The decomposition of real GDP CEMAC trend by using the method of Hodrick-Prescott filter (HP)

The HP filter method is justified by the fact that:

• It is easy to implement and summarizes all statistical methods;
• the assumption of growth of real GDP series is realistic;
• the phenomenon of edge effect can be overcome by extending the series to end with the forecasts.

This method allows us to estimate the potential output of the CEMAC. The series of annual real GDP is used and from 1980 to 2011. The smoothing parameter is λ = 100 since the data are annual. Figure 1 shows the potential output of the estimated CEMAC. This estimate by the HP filter confirms the subdivision made during the analysis of the actual production effect three inflection points can be noticed at the yield curve in 1983, 1993 and 2003. The general observation is that potential output does not follow the movements of the actual production. But after 1997 the actual production is almost confused potential output.
The evolution of the GDP trend allows us to better assess the effects of integration into the growth of the CEMAC countries. Since 1997 the curve of potential GDP is almost confused with the actual production proof that integration in the CEMAC zone benefited the area to reduce to zero the output gap (potential GDP = real GDP). However, the question that arises is whether this growth is observed in the countries themselves, hence the need to study the effects of the CEMAC countries' performance.

1. Modeling: The effects of the creation of the CEMAC specific performance of member countries.
   

In this section we will estimate the import of CEMAC member countries based on gross national income, domestic prices and imports to measure the effects of integration on the performance of member countries and measure gap volume of imports in case.
In this context three countries will attract our attention, Gabon, Congo and Cameroon. It should be noted here that in the context of this work is the integration confused with membership in CEMAC.

1. Choices of individuals

The main question that arises is why choosing the Gabon, Congo and Cameroon?
The analysis restricted to these three countries is that previous studies have shown statistically that the Cameroon and Congo are the main beneficiaries of the Community; Gabon has also been added to the list because it has good performance presented in our analysis of the evolution of the trade balance in the post-CEMAC period.
It should be noted that the integration in CEMAC zone is favored by the intra-Community trade. To this end the country since the establishment of CEMAC a better profile in terms of the level of trade balance are those who could have benefited from better integration. In the light of Figure 2, Chad shows a negative balance of trade until 2002, the CAR for its present throughout the period ever negative trade balance against Equatorial Guinea whose trade balance begins to be positive in 2000 not truly reflect the integration. At the opposite, countries like Gabon, Congo and Cameroon lesser extent are the most integrated for since the creation of the CEMAC have the best relationship in terms of trade balance, one might think that integration has fostered the best performance.

Figure 2: Evolution of the trade balance in the countries of the CEMAC

Source: World Bank and our calculations on Eviews

In light of this statistical analysis and evidence gathered in the literature, our econometric analysis is limited to these three countries.

1. Empirical analysis of the estimation method

The different methods used to measure the effects of an economic union in the literature are based on the Balassa (1967). The method of Balassa (1967) is centered on the comparison of income elasticity of imports between the periods pre-integration and post-integration of these three countries. To this end, he said all things being equal the creation net effect is accompanied by an increase in the income elasticity of total import demand from member countries while the effect of deviation results in a decrease of the income elasticity of demand for imports from non-member countries. Balassa calculated elasticity for the period are pre-integration, taking care to separate imports from member countries and non-member countries. It then uses the total imports to measure the net effect of the creation of the Community. Indeed, it assumes that the lack of integration income elasticity is unchanged.
Thus, income elasticity of demand for total imports during the higher than pre integration post-integration period indicates an effect of trade creation.

Following this empirical review, we estimate the effects of integration into the performance of the CEMAC. However, some changes will be made to test the significance of the model.

1. Modeling
   We base year 1994, the year of creation of the CEMAC. Considering the period 1980-1994 as before-integration CEMAC and 1995-2011 post-integration CEMAC.
   Formulation:
   For even though i, country j can export only when national wealth that has allows him to buy the property and the purchase of this property i is based on the cost of i as follows:

Mij = f ( Pmij) + g (Rnj) (1) with Mij the import demand of good i in country j, Pmi, the import price of good i in country j and Rni, the national income of country j.
Similarly, it must first meet its domestic consumption is based on the domestic price of good i before importing, where: Mij = h (PNij) (2) with PNij national price of good i in country j .
Both equations (1) and (2) give us:

Mt=a1+a2Rnt+a3Pmt+a4Pnt+ut (3)
Thus, the demand for imported products outside the CEMAC is explained by the Gross National Product and import prices and domestic as specified in equation (3).
If the creation of the CEMAC has changed this request, the change will be captured by a binary variable, according to the following equation:

Mt=a1+a2Xt+a3Rnt+a4Pmt+a5Pnt+a6XtRnt+a7PtPmt+a8XtPnt+et (4)

où

With introduction of the variable Xi in equation (4), the sum of squares of the errors will be always less than or equal to that of equation (4). If UDEAC / CEMAC had not been created, or that its creation has been no economically significant effect, equation (4) produce for the period 1960-2005 a sum of squared errors approximately equal to that of equation (4) and Fisher's exact test reveal that the introduction of the binary variable adds nothing more.

1. Estimation

1. Analysis of the stationarity

The application of the methodology Balassa requires the use of stationary variables. Stationarity tests were performed on the variables that lead to the conclusion that they are all stationary in level or first difference. Two tests were used: Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP).

The following table provides the results of the various tests,
(*) Means the rejection of the null hypothesis. For ADF and PP tests are tests for the presence of unit root. The results of the various tests indicate that apart from Lrdpi_Cmrlrdpi_Congo and the other series are not stationary level at 5%. Indeed, for lImport and Lpib variables Lrdpi_Gabon the ADF and PP statistics are greater than the critical values ​​at 5%. In other words these tests do not reject the hypothesis of the presence of unit root. By cons tests on differentiated series lead to different matching: for all tests the null hypothesis is rejected. The hypothesis of non-stationarity in the first difference can be rejected at 5%. Therefore, the study variables are assumed stationary in difference. The stationarity test of Phillips-Perron is consistent with the results obtained.

Table 1: Results of the stationarity tests

Variables / Title / Model used / A level / Model selected / First difference
ADF / PP / ADF / PP
LIMPORT / LIMPORT_CMR / With Constant
and Trend / -2,414 / -7,386* / With Constant without Trend / -16,194*
(-3,581) / (-3,568) / (-2,972)
LIMPORT_GABON / -1,899 / -1,899 / -6,322* / -6,322*
(-3,563) / (-3,563) / (-2,964) / (-2,964)
LIMPORT_CONGO / -2,178 / -2,178 / -6,189* / -6,189*
(-3,563) / (-3,563) / (-2,964) / (-2,964)
LPIB / LPIB_CMR / With Constant
and Trend / -2,936 / -1,358 / With Constant
and Trend for ADF and with constant without trend for PP / -3,868* / -3,258*
(-3,581) / (-3,563) / (-3,622) / (-2,963)
LPIB_GABON / -2,747 / -2,747 / With Constant without Trend / -3,86* / -5,713*
(-3,563) / (-3,563) / (-2,964) / (-2,964)
LPIB_CONGO / -2,38 / -2,38 / With Constant without Trend / -3,86* / -3,86*
(-3,563) / (-3,563) / (-2,964) / (-2,964)
LRDPI / LRDPI_CMR / With Constant
and Trend for ADF and without Constant and trend for PP / -5,175* / -2,021*
(-3,612) / (-1,952)
LRDPI_GABON / With Constant
and Trend / -1,484 / -1,68 / With Constant without Trend / -7,821* / -8,051*
(-3,588) / (-3,563) / (-2,964) / (-2,964)
LRDPI_CONGO / With Constant
and Trend / -6,873* / 7,069*
(-2,964) / (-2,964)

Source: World Bank and our calculations on Eviews

1. Analysis of cointegration with the endogenous variable lImport

The variables of our model are I(1), it should test for cointegration them. If the cointegration test indicates a long-term relationship between the variables, the methodology can be improved by estimating a model error that reflects the stationary long-run relationship between the variables correct. The multivariate approach of Engel and Granger was used for this purpose. Had to be estimated by OLS (ordinary least squares) the long-term relationship between two sets and after recovering residues and apply the unit root test. The test results are summarized in the table below, the residuals are I (0) while the variables are mostly integrated of order 1. The results indicate the presence of a cointegrating relationship between the long-term log of imports, the logarithm of GDP and the price ratio for all three countries.

Table 2: Presentation of the unit root test on the residuals by country estimated by OLS

Residues / Model used / A level / Statistics / Conclusion
Resid_Cmr / sans constantenitendance / PP / -2,818 / I(0)
(-1,953)
Resid_Congo / ADF / -2,768 / I(0)
(-1,952)
Resid_Gabon / -3,208 / I(0)
(-1,952)

Source: World Bank and our calculations

The results indicate the presence of a cointegrating relationship between the long-term log of imports, the logarithm of GDP and the logarithm of the ratio of prices. The relationship is expressed as follows for each country:

limport_cmr = 1,941510797*lpib_cmr – 0,06343018352*lrpdpi_cmr – 23,13950712+ ut;

limport_congo = 2,417332237*lpib_congo + 0,2205276771*lrpdpi_congo – 31,86401766+ vt;

limport_gabon = 0,1887918638*lpib_gabon – 0,5024983652*lrpdpi_gabon + 17,07933629+ zt.

withut, vt and zt stationary series.

This long-term relationship assumes that the GDP has a positive long-term impact on the volume of imports required by a country this is explained by the fact that when the wealth of a country increases its demand for imported goods increases. However, the model estimation error correction shows the irrelevance of this long-term relationship because the estimated coefficients are either insignificant (the t-stat is less than 1.96 in absolute value) or negative (long term variable does not tend to the estimated long-term relationship).
The () indicate standard deviations, and [] the Student t.