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This paper examines the economic performance of the CFA franc zone versus non-CFA countries in recent years. A modified control-group approach is used to compare the evolution of macro-economic indicators in the CFA countries vis-à-vis other sub-Saharan African countries, controlling for initial conditions, changing exogenous internal and world environment, and policy stance. In addition, our approach allows for a formal testing of whether zone membership is a random. The implication of randomness (i.e., no selection bias) is that the CFA zone economies would have performed in the same fashion as the rest of sub-Saharan Africa, for example, in the absence of the zone. Our results show that the randomness assumption is only valid for the cases of GDP growth and inflation. For other indicators (savings, investment, and export ratios to GDP) the decision to participate in the zone is endogenous and is related to the expectation of improved economic performance. Subsequently, in the estimation of the zone's effects on the latter group of indicators, we corrected for the ensuing “sample selectivity” bias by estimating that status indicator (participation versus non-participation) via a probit model.
Our estimation results indicate a weakening competitive position of the CFA members, during the second half of 1980s relative to the first half, compared with the non-CFA countries, in terms of output growth as well as the performance of exports, investment, and savings. The exception is domestic inflation with the CFA countries faring better on that front. Results for a longer term comparison (the 1970s versus the 1980s) are somewhat mixed. While the estimated coefficients for the marginal effect of zone participation corroborates a better performance for the CFA zone over the group of comparators — in terms of exports, domestic savings and investment, and inflation — the zone failed to distinguish itself with regard to economic growth in the long run.
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