WP 00/039 - Macroeconomic policy and trade intergration in Southern Africa

Charles Harvey

Date of Publication: 
April 2000

The aim of this paper is to determine if macroeconomic policy convergence amongst member countries of the Southern African Development Community (SADC) is required for establishing and sustaining a free trade area (FTA). The paper also investigates whether a restraining mechanism is required in order to compel member countries to have compatible macroeconomic policies. The paper finds that macroeconomic policy convergence is not necessary for establishing an FTA, but is necessary for sustaining an FTA over time. The paper also finds that a credible collective agency of restraint against macroeconomic divergence must be created by SADC governments to ensure that SADC, as a free trade area is sustained.

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