SALEH M. NSOULI
In recent years, developing countries have shown increased interest in the net benefits that might accrue from monetary integration. The desirability of economic and monetary integration has been discussed by African, Arab, and Latin American nations and has been an issue raised at various regional meetings, including the Economic Summit Conference of the Organization of African Unity in Lagos, Nigeria, in April 1980 and a conference held at the Arab Monetary Fund in November 1980. In Africa, the Economic Community of West African States considers monetary integration as one of its main objectives in achieving full economic integration among its members and, in the Middle East, one of the principal objectives of the Arab Monetary Fund is the promotion of monetary cooperation among its members.
Despite this increased interest, however, only two monetary unions are at present functioning in developing countries, both of which are in Africa: the West African Monetary Union and the Central African Monetary Union. The relevance of their experience for other developing countries has, however, to be qualified by the fact that France has a certain participatory role in both unions. Although the Eastern Caribbean Currency Authority issues a common currency for its seven members, the Authority does not constitute a monetary union since it lacks the power to set monetary policy. The experience of developing countries with monetary integration is, accordingly, very limited. Further, while the economic literature has dealt extensively with the issue of monetary integration among industrial countries, very little work has been done at either the conceptual or empirical level on the impact of monetary integration in developing countries.
This article analyzes the factors relevant to the desirability of monetary integration among developing countries. Monetary____________________