Oladele Omosegbon Indiana Wesleyan University, USA

Lucas Critique, Time Inconsistency and Economic Integration in Africa+

It really does not matter, since independence, among African States, as represented collectively by the defunct Organization of African Unity, OAU, or the new and revamped African Union, AU, there appears to be a uniform and universal agreement that the continent should move, inexorably, towards a peaceful, prosperous and integrated continent. The paper shows why, in part, even by their own expectations, this goal has either, so far, eluded AU or has been unduly delayed and prolonged by it, its constitutive agencies and its member states. The paper faults the [intellectual] minds, as expressed in various communications, including by policy advisers, academicians and politicians alike, on which the movement and behavior of the continent toward a united continent has been built. The paper draws a common thread of time or dynamic inconsistency, popularized by Robert Lucas, as a veritable explanation for the yawning gap between the predictions and achievements of academicians and politicians, respectively. The idea is and in disagreement with the rational choice model,  that agent’s or decision maker’s preferences do change over time and therefore, the optimality conditions or behaviors on which economic integration were constructed, in the first place, are now violated.  Evidence is drawn from the efforts of the regional economic communities, RECs, at regional integration, and from the African Union in the promotion of a new, forward looking, dynamic and integrated Africa. Further examples are presented from leading research and scholarship supportive of and predicting the realization of a united Africa and from core policies aimed at bringing about custom or monetary unions. As an illustration, political pressure arising from proto nationalism and external colonial ties often sway member countries to take measures that are inconsistent with integration objectives. An example is in not abiding with the agreement on the free movement of people or on free trade, despite a declaration to do so. The paper then offers plausible solutions to the observed Lucas Critique and time inconsistency problems in African economic integration.

+ Abstract submitted to the Annual Conference on Economic Integration in Africa, ACRIA7, Cotonou, Benin Republic, July 7-9, 2016. Oladele Omosegbon, Professor of Economics, Indiana Wesleyan University and Indiana University Purdue University, Indianapolis. oomosegb@iupui.edu; oladele.omosegbon@indwes.edu  317-450-0993

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