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East African Monetary Union: The Domestic Politics of Institutional Survival and Dissolution

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image of Perspectives on Global Development and Technology
For more content, please see Journal of Developing Societies.

Many regional currency institutions were established in subSaharan Africa under colonial rule. Surprisingly, a number of these colonial institutions survived the transition to national independence, and several have survived to the present day (e.g., the West African franc zones and the Southern African rand zone).

In order to understand why some of these regional institutions survived while others collapsed, we have to look carefully at member countries' domestic politics at the time of independence. This study looks at the stop-and-go pattern of postcolonial cooperation in East Africa to provide an understanding of the choice between regional cooperation and the breakup of regional institutions. Newly independent governments in Kenya, Uganda, and Tanzania faced a choice between continuing regional institutional ties and dissolving regional institutions to issue their own national currencies. We argue that governments maintained regional currencies only when past institutions had created a domestic political constituency for continued regionalism. The most important historical legacy of colonial institutions was the way domestic political coalitions were reshaped. This study suggests, therefore, that there is a political mechanism to path dependence: past institutions continue to shape the present through changes in political alignments.


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