Did Mali benefit from joining the CFA zone? An analysis using the synthetic control method

Abstract This article examines the benefits of CFA zone membership by estimating the effects of joining the CFA zone on short‐run business cycle indicators such as income per capita and inflation as well as long‐term economic indicators such as trade relations with France and foreign direct investment (FDI) in Mali. Using the synthetic control method, we show that Mali’s CFA membership has a positive effect on its income, inflation, and FDI but no discernible effect on trade relations with France. We conclude that joining the CFA zone can generate potential economic gains for countries seeking membership by fostering growth and providing price stability but does not necessarily increase trade relations with France even though the CFA is a former French colonial currency.