Academic journal article The European Journal of Comparative Economics

International Trade in Outermost Europe: A Comparative Analysis of Mayotte Island and French Overseas Departments

Academic journal article The European Journal of Comparative Economics

International Trade in Outermost Europe: A Comparative Analysis of Mayotte Island and French Overseas Departments

Article excerpt

Abstract

This article analyzes determinants of exports and imports by French overseas departments and reveals insights into the market access of these ultra-peripheral regions. Special attention focuses on Mayotte Island, which will take on the status of the "Outermost Region of Europe" in 2014. The estimates, based on gravity models, show that (a) economic crises in a partner country hinders imports from French overseas departments; (b) immigration, a serious concern in Mayotte, has a significant, negative impact on the trade deficit, by both raising imports and reducing exports; (c) historical colonial links can still explain trade; and (d) a common language with the partner country boosts exports from Mayotte more than exports from other overseas departments.

JEL: C5, F14, O15

Keywords: Ultra-peripheral European regions, Mayotte, Gravity model

(ProQuest: ... denotes formulae omitted.)

1. Introduction

Our aim is to help the outermost regions to become more self-reliant.

-Johannes Hahn, European commissioner, 20 June 2012

Situated throughout the Atlantic and Indian Oceans, the Caribbean Sea, and in South America, the outermost regions of Europe account for more than 4 million inhabitants and represent a particular challenge for European integration. These regions-defined by their remoteness, economic dependence on a few products, small size, and insularity2-include the four French overseas departments of French Guiana, Guadeloupe, La Reunion, and Martinique; the Portuguese regions of Azores and Madeira; and Spain's Canary Islands. Mayotte Island will join this group in 2014. With this study, we seek to analyze the trade integration of these regions, which is a central focus of European policy. Because extended trade data are not available for the Spanish or Portuguese regions, we investigate French overseas departments during 1990-2011. Very few studies analyze these regions;3 no previous studies have considered Mayotte.

Mayotte belongs to the Comoros Islands archipelago4 and has a long history with France. As a component of the French colonial empire, starting in 1840, Mayotte became an overseas territory in 1946, along with the other islands of the Comoros: Grande Comore, Anjouan, and Moheli. In December 1974, a referendum on the independence of the Comoros Islands was organized, involving consultation with the population, island by island. Among the four islands, only Mayotte refused independence, with a 63.8% majority. In early 1976, the population of Mayotte again confirmed overwhelmingly that it wanted to remain French (99.4%). A law passed 24 December 1976 thus granted it the status of territorial collectivity; in 2001, that status changed to a "departmental collectivity," though Mayotte did not become an actual department. The law prompted the transfer of executive power from the Prefect to the President of the General Council. Finally, on 21 February 2007, another new law shifted the status of Mayotte, in view of its possible transformation into an overseas department. On 31 March 2011, it thus became the fifth overseas department and 101st French department overall, and on 11 July 2012, the European Council recommended that it take the status of a "ultra-peripheral region" (UPR) of the European Union, starting on 1 January 2014. Considering its unique characteristics, remoteness, and insularity, Mayotte can expect to receive significant EU structural funds of approximately 475 million Euros during 2014-2020. These funds will help it complete priority projects to improve sanitation, roads, ports and airports, electrification, and education-projects for which the costs are likely to exceed 1 billion Euros.

With an estimated 2009 gross domestic product (GDP) per capita of 6570 Euros (INSEE, economic accounts), Mayotte differs considerably from mainland France, as well as in relation to other overseas departments, at both economic and social levels. Specifically, its GDP per capita is approximately two times lower than that of France's other overseas departments and four times lower than that of the mainland France. …

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