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This chapter aims to demonstrate how the colonial legacy in general, and in its monetary area in particular, has been one of the major obstacles to African countries' ability to mobilize financial resources for their development. In fact, the monetary systems inherited from colonialism serve as an instrument to plunder African resources and extract surplus for capital accumulation in former colonial powers. One of the best examples is found in the relationships between France and its former colonies in West and Central Africa. The monetary system imposed on those countries is essentially perpetuating the Colonial Pact, under which the role of the colonies is to serve the political, economic, and strategic interests of the colonial power. For African countries, the monetary arrangement, illustrated by the use of CFA franc as their currency, has been a major obstacle to capital accumulation, productive capacity building and effective structural transformation of their economies. Unless African countries break free from the CFA monetary system and reclaim their sovereignty, there will be no development. The struggle for monetary sovereignty in former French colonies is now part of a broader continental struggle to reclaim Africa's sovereignty over its resources and the formulation of its development policies.

Does a strong commitment to an exchange rate peg reduce the cost of financial capital to less developed countries? We use a sample of twelve Caribbean countries to examine the impact that the Eastern Caribbean Currency Union (ECCU), a currency board/monetary union, has in lowering the cost of borrowing to its members. Results from estimations on individual and pooled annual data from 1976–1999 indicate that membership in the ECCU, in addition to other policy variables, significantly reduces the cost of financial capital.

This paper analyses the possibility of Latin America's (LA) major economies adopting dollarization, considering that in the last decade macroeconomic instability has once again challenged the ability of certain economies to properly manage their own currency.

To determine the feasibility of adopting the US dollar as official currency, the author uses the framework of optimum currency area (OCA) theory, since, in fact, dollarization is an incomplete monetary union. The author uses a structural vector autoregressive (SVAR) model to identify what type of structural shock — country-specific, regional or global — prevails in LA economies. For this purpose, the US output is used to represent the global output and determine how the shocks of the US influence the output trajectory of each LA nation. The higher the influence of the US product, the lower the costs of adopting the US dollar.

The results of the variance decomposition show that the influence of the US shocks in the gross domestic product (GDP) trajectory of LA countries has significantly decreased over the last two decades, even in the currently dollarized economies. The estimates for Venezuela and Argentina show that the importance of US shocks in the trajectory of their GDP is low. Therefore, the cost of adopting the US dollar as the official currency would be high.

In view of hyperinflation and macroeconomic imbalances in certain LA nations, the dollarization debate has resurfaced in recent years. However, the literature that empirically evaluates the feasibility of adopting dollarization as a monetary system under current economic conditions is limited.

Considers the likely microeconomic effects of European Monetary Union (EMU) and the European Central Bank (ECB), i.e. impact on firm‐level incentives and performance. Believes that firms’ uncertainty will be reduced by “a more stable and prudent macroeconomic environment”, and that a strong euro will lead to lower interest rates, reduced transaction costs, the elimination of exchange rate risk within the EMU and therefore increased output, investment and competition. Accepts that firms may find transition costs expensive and that opportunities for fraud and errors will increase in the transition period. Identifies the sectors and types of firm most likely to benefit in the short term and recognizes the possibility of longer term problems which may reverse the competitive advantages.

The chapter presents a historical and economic analysis of Nordic wage formation, with a special focus on how collective agreements really work. A stereotypical interpretation of the evolution of Nordic wage bargaining systems is that a centralised setting of wages has gradually been substituted with more decentralised pay bargaining. This overlooks the fact that central organisations could never really control wage levels, even in the golden age of centralised bargaining. Instead, central pay bargains defined minimum wage changes that ensured that local conflicts would be ruled out. Moreover, the central stipulations could often be overruled or adjusted at the local level. Following insights of Teulings and Hartog, we argue that the main function of Nordic collective agreements has always been to rule out local conflicts that would otherwise be initiated to seek local rents. Thus, collective agreements combine macroeconomic flexibility with adequate investment incentives at the local level. In this crucial sense, Nordic collective agreements are a completely stable institution. The most important transformation that has taken place is that formal peak bargaining on mean pay increases has been substituted with pattern bargaining where the manufacturing industry acts as a wage leader. Economic theory suggests that this almost amounts to centralised pay setting.

The writing of this case study was triggered by the numerous media reports in 2020 that talked about the EU nations losing its solidarity. EU being a very appropriate example of economic, monetary and customs union while teaching theories of economic integration and international relations, the post-pandemic approach of EU leadership to rebuild the crisis-ridden member nations seemed an excellent material for developing a teaching case study.

The case study was written based on secondary data and published information available. Enough desk research was undertaken to build the characterisation of the protagonists and due diligence done to chronologically report all facts of the case as the story developed. It was decided to build the epilogue into the case study so that the case analysis had enough depth.

The case is set in 2020 when the global economy was reeling under the massive impact of a lockdown and the aftermath. The case study examines the model of economic union in international business and the various challenges that governance of an association of nations such as the 27 member EU can throw up. It examines the conflict of interest that can arise among member nations during critical circumstances such as the pandemic and its massive tolls.

EU had established itself as a critical international trade player and had already proven their might as a united entity to the world trade partners, given the fact that they were not only a customs union but also a monetary union. In this scenario when the pandemic threw them into the whirlwind of lockdown-induced crisis, the united front of the mighty EU all but crumbled. As the worst-hit economies of Italy and Spain struggled to pull themselves back to normalcy, EU experienced one of its worst solidarity crises.

EU’s president Angela Merkel and ally French President Emmanuel Macron with support from the EU Council’s President Charles Michel stepped forward to resurrect the badly hit economies. They viewed this as the best opportunity to bring about a united front by coming together at Brussels for a summit when lockdown eased up in July 2020. It was to be a show of unity to jointly bail out the severely affected member nations by grants rather than loans. The summit, however, snowballed into bitter arguments and open bickering between the wealthy and not-so-wealthy members, and they could not agree upon the issue of debt vs aid. The fact that the EU was an agglomeration of 27 nations, which were far from homogenous in socioeconomic status, not to speak of divided political ideologies, only added dimensions to the dispute. Negotiations repeatedly hit roadblocks. Can the EU leaders lead their bitterly divided house to a consensus?

The case is suitable for graduate and post-graduate levels. Management courses where international business studies, international trade blocs and global leadership are part of curriculum can use the case to teach concepts of “Regional economic integration”, “Economic and Political union” and theories of “International relations” and “Negotiation”. It can also be ideally used in an executive management programme on “Global Leadership” to highlight the complexities of “governance of international associations” and “consensus building amidst diversity”.

The market-based monetary policy framework has been favoured by Economic Community of West African States (ECOWAS) economies. Hence, this study aims to investigate the effect of monetary policy channels on the sectoral value added and sustainable economic growth in ECOWAS. Data from the World Bank and International Monetary Fund over 2013–2019 were sourced for thirteen member countries. ECOWAS is found to have very high inflation level, interest and exchange rates.

The study adopted the Driscoll–Kraay fixed-effects ordinary least squares regression (OLS) estimator.

The findings revealed that while the effect of monetary policy channels on the agricultural sector value added is largely heterogenous and significantly in-elastic, the one on the industrial and services sectors are overwhelmingly homogeneous and negative, but insignificant for the services sector. Moreover, the effect of monetary policy channels on sustainable economic growth is also homogeneously asymmetric, with imminent stagflation, while the interactive effects of monetary policy channels are heterogeneous on sustainable economic growth and economic sectors. Therefore, an inflation targeting monetary policy stance is generally recommended with prioritised exchange rate stabilisation amid sufficient fiscal space.

This is amongst the first studies to investigate monetary policy channels, sectoral outputs and sustainable growth in the ECOWAS region with a rigorous analysis and found implications for policy.

The purpose of this paper is to assess the plausibility of four different mid-term paths of development of the European Union (EU): first, a political union or a European state; second, a differentiated and flexible integration of the polity; third, a covert and deepening integration of the polity outside of the political arenas; fourth, the disintegration and/or dissolution of the EU through the exit of individual members or a joint decision to terminate the union.

The paper uses strategic interaction analysis to identify the plausibility of each of these four possible outcomes. By systematically varying the relevant actors’, i.e. European Council’s and member states’, the European Parliament’s, the Commission’s, preferences over outcomes while holding constant institutional rules of decision making on the one hand, and systematically varying institutional rules on the other while holdings actors’ preferences constant, the paper comes to the conclusion that differentiated and flexible integration and covert integration are the most plausible mid-term paths of development.

The paper finds that neither a European state or deep political union nor a disintegration or even dissolution of the EU is the most plausible path of development. Rather, it concludes that flexible and differentiated integration as well as covert integration outside the political arenas are the most likely developments. However, it also draws attention to the political costs of flexible and differentiated integration which does not allow for an overall view of political and policy issues negotiated at one political table, limiting the scope of compromise formation and even leading to a fragmented polity. Covert integration consisting of mechanisms of hidden integration “invisible” to the wider public may lead to a democratic backlash, once citizens realize that integration has considerably deepened without their being aware of it.

Most publications regarding the future development of the EU are normatively driven, either conjuring an imminent disintegration, or invoking the necessity of a deepening integration leading to a political union. This paper, by contrast, seeks to assess the likely further development based on empirically identified factors and a logical argument.

This chapter examines exchange rate options for East Asian countries, taking into account their real economic linkages as well as their international financial relations. Particular consideration is given to possible exchange rate cooperation within the region. For this purpose, the literature on the optimal peg is reconsidered and subsequently extended to include a country's international financial asset and liability situation. That is, instead of focusing solely on nominal or real effective exchange rates, the chapter proposes a blend of “real” and “financial” exchange rates for analyzing “optimal” exchange rate policy.