Measuring the efficiency effect of integration in the South African Development Community

Abstract

This paper concerns the exploration of the efficiency effects of regional economic integration at the level of each member country. In specific, the question addressed is: does regional economic integration improve the economic efficiency of member countries? This broad question is narrowed down by focusing on the Southern African Development Community (SADC) and by focusing on the integration index created recently by the three continental institutions of Africa: the AU, AfDB and UNECA. Efficiency will be measured using stochastic frontier, a parametric methodology that allows the estimation of a country’s production possibility frontier. Efficiency is thus estimated according to how close to its production possibility frontier an economy produces its output.