Feasibility of Optimum Currency Area (OCA) for Economic Cooperation Organization States (ECO): Fuzzy C-Mean Clustering Algorithm

This paper applies Optimum Currency Area (OCA) theory to examine the plausibility of a currency union among Economic Cooperation Organization (ECO) member states، using the Fuzzy C-Mean (FCM) Clustering Algorithm technique. In other words، this paper investigates the degree of homogeneity of ECO member states during two periods of (1992-1999) and (2000-2010)، using the six OCA Criteria. The results of the study indicate that ECO states، based on the OCA criteria، are not sufficiently and thoroughly homogeneous to be categorized in the same cluster. On the whole، the OCA criteria mean of ECO states show improvement، when passing from the first period to the second period. Homogeneity of OCA criteria reflects an increase، too. In sum، this paper shows that، from the first period to the second period، homogeneity of ECO states، and due to the fact that clustering has moved towards clustering with fewer clusters، has relatively increased.