Challenges in Trade openness, Governance and Industrial Productivity in West African Economic and Monetary Union (WAEMU) Countries

Kossi Ayenagbo,Mamadou Boukari

doi:10.11114/aef.v8i5.5343

Abstract

Inward-looking development strategies can lead to marginalization and slow growth especially for the small African domestic markets. However, when weak economies try to participate in the global economy studies in Southeast Asia show they end with significant challenges. Therefore, this paper analyzed the effects of trade openness on industrial development in West African Economic and Monetary Union (WAEMU) countries. However, due to data availability, the study covered seven countries over the 1996 – 2018 period. The pooled-mean group method was used in the analysis. The results of the analysis showed that, in the long run, trade openness did not benefit the development of the industrial sector in all the countries studied. However, in the short run, the results revealed the specificities of each country. These short-run results showed that trade openness has a positive and significant effect on the industry added values observed in countries such as Burkina Faso, Niger and Togo. The results also showed that government inefficiency has a negative impact on the development of the industrial sector in the long -run for all the countries studied. Furthermore, the indicator capturing the degree of freedom of corruption had a positive impact on the development of the industrial sector in the short or long run. Therefore, active engagement with the forces of globalization need strategic approaches in their integration in developing countries.

Highlights

The globalization of the world economy is perhaps the most important trend which underlies all the current conditions for the economic development of a country (Ernest Aryeetey et al, 1998)
One of the most ways for Sub-Saharan Africa, and the West African Economic and Monetary Union (WAEMU), to participate in global economic integration is in the enhancing of their integration of these countries into international trade
To analyze the effect of trade openness on industrial development in the WAEMU zone, we are inspired by the Cobb Douglas production function, whose technological progress is neutral in the sense of Hicks: yt At Kt L t

Summary

Introduction

The globalization of the world economy is perhaps the most important trend which underlies all the current conditions for the economic development of a country (Ernest Aryeetey et al, 1998). It offers excellent opportunities to all countries, especially those in Sub-Saharan Africa, enabling them to increase their productivity and to accelerate their economic development. One of the most ways for Sub-Saharan Africa, and the West African Economic and Monetary Union (WAEMU), to participate in global economic integration is in the enhancing of their integration of these countries into international trade. In this system, international trade, opportunities are offered to countries as well as to individual companies. The constraints to the development of the industrial sector in the WAEMU countries have remained enormous. Industrialization plays a decisive role in the development of a country

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Conclusion