English

Using panel data from 1990 to 2016, this paper examines the Granger causality and long-run relationship between foreign direct investment, and trade (imports, exports, and trade openness) in the West African economic and monetary union (WAEMU). This study will determine the link between international trade and foreign direct investment to the policymakers. The study follows the short-run causality, cointegration, and long-run approach. The Granger causality tests that there is causality between trade and FDI. The analysis uses Kao and Pedroni method which reveal the existence of cointegration between trade and FDI. The long-run effect tests suggested that foreign direct investment has a positive long-run effect increasing export WAEMU. The tests also indicate that foreign direct investment has a positive long-run effect spurring import and leads to more trade openness in WAEMU. Additionally, the long run estimation indicates that FDI induces to more trade openness in WAEMU. Moreover, the analysis indicates also that export and import have a positive and significant long-run effect on foreign direct investment. Furthermore, the estimation indicates that trade openness has a positive and significant impact on attracting more foreign investment in WAEMU. We explored the economic and policy implications of our analyses in the conclusions.

This paper aims to study the relationship between financial development, information, and communication technology (ICTs) diffusion and economic growth by examining the effects of interactions between finance and ICT on economic growth. The study covers eight West African Economic and Monetary Union (WAEMU) countries and spans the period from 2000 to 2018. The empirical results, after applying the fully modified ordinary least squares (FMOLS) estimator can be generalized as follows. First, regardless of the financial development indicator used, the empirical results show that financial development negatively influences economic growth in the WAEMU. This counter-intuitive relationship may be related to many phenomena, but there are no clear explanations in the literature yet. Second, ICTs diffusion improves economic growth in the zone. This implies that WAEMU countries should strengthen their ICTs policies and improve the use of new information and communication technologies. Finally, the interaction between ICTs diffusion and financial development is positive and significant in explaining growth. This implies that the economies of the WAEMU region can only benefit from financial development once a level of ICTs development is reached.

The main concern of this paper is to answer the question of the determinants of FDI inflows to West African Economic and Monetary Union (WAEMU). The literature on FDI recognizes not only the existence of gaps between domestic savings and investment in most developing countries but also that FDI constitutes a cure capable to bring the latest technology and management know-how into these countries. The aim of this paper is to find the macroeconomic determinants of FDI in WAEMU (constituted of 8 countries namely: Benin, Burkina Faso, Cote d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo). To this end, an econometric model based on panel cointegration analysis for the period 1980-2010 was estimated. The results show that countries with high potential market size (GDP per capita), large trade openness and with more business friendly environment (low political risk) attract more FDI. The findings further show that: (i) infrastructure development is one of the most important determinants that attract FDI to the region; alongside the human capital, financial development, macroeconomic stability, exchange rate and political stability; (ii) not all the variables affect FDI the same way in the WAEMU region; (iii) there is a positive relationship between FDI and economic growth which implies that FDI stimulates economic growth; (iv) this study finds a positive relationship between FDI and macroeconomic stability (inflation) in WAEMU; (v) financial development needs to be improved to enable more gain from FDI. This suggests that the impact of FDI can be enhanced through financial development under a good environment that has to be provided in WAEMU.

This article focuses on the relationship between certain fiscal policy instruments and economic growth in the countries of the West African Economic and Monetary Union (WAEMU), namely Benin, Burkina Faso, Ivory Coast, Mali, Niger, Senegal, and Togo. Our growth model was estimated using the "Generalized Method of Moments (GMM) in a system" dynamic panel over the period 1990-2020. The results obtained show that total public revenue excluding grants, total expenditure, external public debt, the active population, and credits to the economy over GDP positively and significantly influence the GDP growth rate. On the other hand, an inflationary environment and poor quality of the Institutions negatively and significantly affect the rate of GDP growth. By way of economic policy implications, the WAEMU countries should reduce the distortions associated with taxation in order to maintain a fairly substantial level of resources and gradually break away from external forms of financing. Finally, financial development must be promoted so that companies can obtain more loans from banks.

Publisher Summary This chapter discusses the financial development and economic growth in underdeveloped countries. An observed characteristic of the process of economic development over time, in a market-oriented economy using the price mechanism to allocate resources, is an increase in the number and variety of financial institutions and a substantial rise in the proportion not only of money but also of the total of all financial assets relative to GNP and to tangible wealth. Typical statements indicate that the financial system somehow accommodates—or, to the extent that it malfunctions, it restricts—growth of real per capita output. Such an approach places emphasis on the demand side for financial services; as the economy grows it generates additional and new demands for these services, which bring about a supply response in the growth of the financial system. In this view, the lack of financial institutions in underdeveloped countries is simply an indication of the lack of demand for their services.

The search for financial stability remains a priority in every country today, mainly because of high costs incurred by financial crises and induced effects of financial stability on economic growth. The economies of the West African Economic and Monetary Union (WAEMU) countries are characterized by a strong dependence on the outside, especially with regard to the value of their currency, the CFA franc, and thus the variability of their exports but also the terms of trade. This study is conducted using an equation of financial instability with panel data. We used simple moving averages to measure the volatility for the different variables. The results show that the main predictors of financial instability in the WAEMU are: distributed credit, inflation and the rate of export growth. The study shows the need for diversification of production in the area and effective supervision of the banking system to better cope with shocks from internal and external, and financial stability. Key words: Financial stability, financial development, economic growth, West African Economic and Monetary Union (WAEMU), exportation, exogenous shocks, CFA franc.

In continuation of reflections on the factors of growth in the West African Economic and Monetary Union (WAEMU), with all the resources it contains, we must consider the implications of the external opening in achieving the growth objectives of the union. Speaking of the external opening in the context of this study is to put forward the exports and imports carried out between the country and the world. Another dimension of the openness used in this study is the foreign direct investment received by these countries. The aim of this paper is to try to provide some answers to the following question: What is the impact of openness on economic growth of the WAEMU’s countries? To answer this question the dynamic panel methodology in the period 1994-2008 is used. The results show that the WAEMU’s countries are primarily countries extroverts. This is demonstrated in terms of openness, the rate of penetration and the export effort. Through the co-integration test, we notice the long-run relationship between GDP and the different dimensions of the opening used in the study. In addition, opening has a positive effect on economic growth in WAEMU. Moreover, foreign direct investment has an impact significant on growth in these countries.

<p><em>This paper provides an empirical assessment of the relationship between banking, liquidity, investment, terms of trade, bank solvency ratio, financial development and economic growth in the WAEMU zone. The analysis focuses on 7 countries of the West African Economic and Monetary Union (WAEMU) and covers the period 1994-2015. Using the panel data approach, we show that economic growth is positively </em><em>related </em><em>with banking on liquidity. In addition, the results highlight the impact of bank liquidity on economic growth but mitigate when it is associated with the investment.</em></p>

This paper studies the link between financial development and economic growth in the West African Economic and Monetary Union (WAEMU). Using panel data for WAEMU countries over the period 1995-2006, the results suggest that while financial development does support growth in the region, long-term bank financing has a greater impact on economic growth than short-term financing because long-term projects have higher returns adjusted for risks. Given that in the WAEMU short-term credit accounts for about 70 percent of credit to the private sector, WAEMU countries are less able to reap the full benefits of improvements in their financial systems. The results also highlight the importance of macroeconomic stability, a creditor-friendly environment, political stability, and the availability of long-term financial resources in fostering banks' supply of long-term loans.

This paper studies the link between financial development and economic growth in the West African Economic and Monetary Union (WAEMU). Using panel data for WAEMU countries over the period 1995-2006, the results suggest that while financial development does support growth in the region, long-term bank financing has a greater impact on economic growth than short-term financing because long-term projects have higher returns adjusted for risks. Given that in the WAEMU short-term credit accounts for about 70 percent of credit to the private sector, WAEMU countries are less able to reap the full benefits of improvements in their financial systems. The results also highlight the importance of macroeconomic stability, a creditor-friendly environment, political stability, and the availability of long-term financial resources in fostering banks’ supply of long-term loans.

The strategic choice of Moroccan banks to conquer the African market has accelerated since the mid-2000s. According to the Banking Commission of the West African Economic and Monetary Union (WAEMU), Moroccan banks concentrate 29.6% of the market share in the WAEMU region in 2015, and more than 30% of the share of global net income in the region. The article is devoted to the research of the role of Moroccan banks in the economic development in African countries. Can Moroccan banks affect real economic activity and act as catalysts for financial and economic development in African countries? To answer this question, we examine the co-movements between loans granted by Moroccan banks in African countries and real activity in those countries. Therefore, we use the synchronization index proposed by Hading and Pagan (2002). The cycles were obtained with a Hodrick-Prescott (HP) filter. The concordance index values, cross-correlation values were used to identify the characteristics of the relationships between the cyclical components. The study covers the period 2006-2015 and focuses on three Moroccan banking groups (Attijariwafabank, BMCE Bank of Africa and Banque Centrale Populaire BCP) set up in seven countries: Benin, Burkina Faso, Cote d'Ivoire, Mali, Senegal, Togo and Niger. The empirical results revealed that the financial (credits granted by Moroccan banks) and business (real activity) cycles are highly synchronized in WAEMU. The study concluded that the bank credits have a positive impact on real activity in WAEMU countries within the period examined.

Using Generalized Method of Moments (GMM) panel data analysis to examine the relationship between Foreign Direct Investment (FDI), financial development and economic growth in a group of 70 developed and developing countries from 1988 to 2002, it is found that the impact of FDI on economic growth is ambiguous. FDI may either increase or decrease the growth rate of the economy, depending on the financial market development indicators used in the study. The findings, however, support the notion that a certain level of financial sector development is a significant prerequisite for FDI to have a positive effect on economic growth. Policy implications are clear that since it has been stated that the economic performance depends to some extent on the development of domestic financial sector, effort should be made to reform and improve the development of domestic financial and banking sector in order to benefit more from the presence of FDI. (ProQuest: ... denotes formulae omitted.) Introduction There are few channels through which Foreign Direct Investment (FDI) permanently affects the growth rate, depending on the different models of economic development. In Solow-type standard neoclassical growth models, FDI is traditionally viewed as a crucial source in increasing the capital stock of a country. According to this school of thought, there is no difference between domestic and foreign capital in affecting economic growth. Moreover, it is suggested that, with the assumption of diminishing returns to capital, the impact of FDI on growth is crucial in the short run, but not persistent in the long run (Barro and Sala-i-Martin, 1995). In endogenous growth models, the potential of FDI in influencing growth is greater. In the literature, the role of FDI in growth can be explored through production function. Different from Solow-growth model, foreign capital will influence the path of domestic capital significantly, that is, either crowd-in or crowd-out domestic investment. If foreign capital produces a crowdin effect on domestic capital (or the relationship is complementary), then the impact of FDI on growth will be larger. Furthermore, if the presence of FDI affects local capital differently, for example, by the way of expanding the variety of intermediate and capital goods, then it can lead to improvement in the productivity level of the recipient country (Borensztein et al., 1998). Besides, FDI also affects labor via job creation. The role of FDI, nevertheless, is more significant in transferring technology and know-how that are embodied in human capital. The effect of FDI would be limited if the recipient country does not meet the minimum threshold of the absorptive capacity in terms of human capital, technological skills and domestic financial development (De Mello, 1997; Levine, 1997; and Borensztein et al., 1998). Therefore, the presence of FDI inflows will entail crucial knowledge transfer in terms of training, skill acquisition, new management practices and organizational arrangements. All of these will contribute to a higher level of productivity and efficiency of human capital or labor, which will lead to a higher level of economic growth. In line with the findings, single-country studies for Australia (Caves, 1974), Canada (Globerman, 1979), and Mexico (Blomstrom and Persson, 1983) found that the presence of Multinational Enterprises (MNEs) had positive effects on local productivity. In contrast, studies for Morocco (Haddad and Harrison, 1993) and Venezuela (Aitken and Harrison, 1999) concluded that there was no evidence that MNEs had a positive effect on the productivity growth of local firms. In another study, Kholdy (1995) determined the causality relationship between FDI and spillover efficiency, as defined by higher labor productivity and capital formation, in Mexico, Brazil, Chile, Singapore and Zambia. However, he argued that there is no causality linkage between FDI and labor productivity in the countries under consideration. …

This article examines the relationship between trade openness, financial development and economic growth on a panel of four North African countries (Tunisia, Morocco, Algeria and Egypt), over a 5-year period from 1998 to 2017. Using dynamic panel data model estimated by means of the Generalized Method of Moments (GMM), we found that trade openness is positively related to economic growth. We also found that trade openness appears to be working as a complement to financial development and, moreover, that the effect of trade openness is more pronounced in the presence of the financial development variable. The findings suggest that trade openness and financial development are important elements in determining economic growth in these countries. Therefore, the policy-makers should continue to patronize the development of their financial sector and to allow more trade openness in order to achieve a high and sustainable economic growth.

This paper investigates the relationship between Foreign Direct Investment (FDI) and economic growth in a group of 16 Arab countries from 1970 to 2008. The empirical analysis also addresses the role of what are identified in the literature as local for deriving growth benefits from FDI. Using a dynamic panel approach, it is found that the impact of FDI on economic growth in Arab countries is limited or negligible. The findings also suggest that financial development, trade openness, human capital and infrastructure quality are not significantly improving Arab countries' capacity to reap growth benefits from FDI. The paper suggests that the preconditions should not be seen as of equal importance. The sectoral composition of FDI plays a critical role in deriving FDI growth benefits which might make it a necessary precondition for FDI to promote economic growth, while other factors such as financial development, trade openness, human capital and infrastructure quality could be seen as sufficient preconditions for reaping FDI growth dividends. The paper's findings have important policy implications as Arab countries can turn to domestic policy solutions to direct FDI inflows to the dynamic sectors and focus not only on FDI quantity but also on FDI quality. Meanwhile, efforts should be made to reform and improve institutional quality, macroeconomic policies, and domestic financial markets.Keywords: FDI, Economic Growth, Arab CountriesJEL classification: F21, O40, O43(ProQuest: ... denotes formulae omitted.)1. INTRODUCTIONCapital is the cornerstone of any production process at both the micro and the macro-economy levels. Capital can be obtained through domestic sources as well as through foreign sources, which is mostly in the form of Foreign Direct Investment (FDI). FDI inflows have multifaceted features which make them preferable to other sources of capital. These features include filling savings-investment gaps, relaxing foreign exchange constraints, and consisting of a bundle which includes not only capital but also technology, knowledge, and marketing and managerial skills (Grossman and Helpman, 1992; Walz, 1997; Pradham, 2003).FDI has become the most stable and the largest component of capital flows to developing countries. As a result, FDI is considered an important element in the economic development process. Yet the role of FDI in the economic growth/ development process has for long been a topic of intense debate. To date, the empirical evidence of the effect of FDI on economic growth is not conclusive.While one stream of research has indicated a positive impact of FDI on economic growth, another stream reports otherwise. A third stream of research suggests that the effect of FDI on a host country's economy is dependent on the country's absorptive capacity in terms of its human capacity and the level of economic and financial development (Hermes and Lensink, 2004; Makki and Somwaru, 2004).FDI flows around the world have dramatically increased in the past three decades. World FDI flows rose from $54 billion in 1980 to $208 billion in 1990, then to $1,401 billion in 2000 before falling to $1,114 in 2009. Arab countries were not an exception to this trend. Total FDI inflows to Arab countries increased from a mere $502 million in 1970 to $1,288 million in 1990, then jumped to $6,056 million in 2000 before soaring to $47.6 and $79.2 billion in 2005 and 2009, respectively (UNCTAD). These trends reflect the increasing importance of FDI flows both for recipient and exporting countries.This paper aims at answering two main questions. First, did FDI inflows contribute to economic growth in Arab countries over the period 1970-2008? Second, can country-specific features and initial conditions explain cross-country variations in the growth benefits of FDI? Answers to these questions provide insights into how changes in economic and institutional conditions can affect FDI prospects for Arab countries, as well as inform policy responses for acquiring growth benefits from FDI in the future. …

This study investigated the link between financial development and economic growth in Togo for the period 1981-2010. The study employed Johansen’s cointegration and Granger causality testing procedure in the context of Vector Error Correction Method (VECM). The result shows a positively and statistically significant effect of financial development on economic growth in Togo and Granger causality test supports supply-leading view that comes from financial development to economic growth. This means that the causal relationship between financial development and economic growth in Togo is unique and is running from financial development to economic growth. The empirical results further confirm a unique cointegration relationship among real GDP per capita, financial development, inflation, primary completion rate, openness, foreign direct investment and real exchange rate. In addition, the variable primary completion rate, foreign direct investment and real exchange rate contribute positively to economic growth in Togo while inflation and openness discourage the economic growth in the Togo. The findings of the study call for the introduction of effective policy measures to deepen financial sector since financial development is an essential precondition for the positive impact of FDI on economic growth. Key words: Financial development, economic growth, devaluation, Togo.