Monetary Union Membership in West Africa: A Cluster Analysis

SummaryApplying hard and soft clustering algorithms to a set of variables suggested by the convergence criteria and the theory of optimal currency areas, this paper examines the suitability of countries in the west African region to form the proposed monetary unions, the West African Monetary Zone (WAMZ) and the Economic Community of West African States (ECOWAS). Our analysis reveals considerable dissimilarities in the economic characteristics of member countries, particularly WAMZ countries. Furthermore, when west and central African countries are considered together, we find significant heterogeneities within the CFA franc zone, and some interesting similarities between the central African and WAMZ countries.