Economic Community Of West African States Countries Research Articles

Impact of credit expansion and contraction on unemployment

PurposeWe investigate the impact of private credit expansion and contraction on the unemployment rate in Economic Community of West African States (ECOWAS) countries.Design/methodology/approachCredit expansion and contraction are measured using a three-level criterion. The fixed effect panel regression model was used to estimate the impact of private credit contraction and expansion on the unemployment rate in ECOWAS countries.FindingsPrivate credit contraction significantly increases the unemployment rate in ECOWAS countries. Private credit expansion does not have a significant effect on the unemployment rate. Real GDP growth has a significant negative effect on the unemployment rate which supports the prediction of the Okun’s Law while the inflation rate has a positive and insignificant effect on the rate of unemployment in ECOWAS countries which contradicts the prediction of the Phillips curve.Practical implicationsPolicymakers in ECOWAS countries need to be cautious when introducing policies that lead to private credit contraction as it could increase unemployment. Policymakers in ECOWAS countries should also find the “threshold” below which private credit contraction will worsen the unemployment rate and introduce policy measures to ensure that private credit contraction does not fall below the threshold.Originality/valueThe literature has not examined the factors leading to tight labor markets or unemployment in West African countries.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2023-0939.

The Moderating Effect of Institutions in Government Expenditures - Economic Development Nexus in ECOWAS Countries

The total effect of growing public spending on economic development is ambiguous, especially with today’s realities of exposure to international trade and domestic factor such as institutions. Hence, the objective of this study is to test the hypothesis that good institutions moderate the effect of large government size on economic development. The study employed secondary data covering the period 1986 to 2018 and Arellano and Bover’s Generalized Methods of Moments (GMM) panel estimation technique was used to achieve the study objective. Data on Gross Domestic Product per capita, government size, population growth rate, inflation rate, gross fixed capital formation, human development index (HDI) and financial development were sourced from World Development indicator database while data on institutions was obtained from International County Risk Guide database. The study found that the stated hypothesis is validated i.e good institutions mitigate any negative effect of large government size on economic development for Economic Community of West African States (ECOWAS). The study therefore, concluded that the relationship between government size and economic development depends on quality of institutions in ECOWAS countries. It is recommended that member countries should embrace democratic governance and build democratic institutions in order to promote government stability. More so, there is need to tightening up of existing public sector rules and regulations on corruption and the setting up of anti-corruption institutions to fight corruption and check corrupt behaviour in the ECOWAS countries.

Do agricultural exports enhance agricultural (economic) growth? Lessons from ECOWAS countries

Given the urgent need to increase farming income and foreign exchange earnings, a substantial expansion of agricultural production for export is often a rational policy in developing countries, including the Economic Community of West African States (ECOWAS). The study analyzes the effects of agricultural exports on agricultural growth and overall economic growth in the ECOWAS region for the period 1996–2018. It also explores the combined effect of agricultural exports and agricultural growth on economic growth. We use the instrumental variables approach to control the endogeneity issue. Findings indicate that agricultural exports significantly enhance agricultural growth and overall economic growth. Moreover, the effect differs considerably from the agricultural growth equation to the economic growth equation. We also find that there is no complementarity nor substitutability effect of agricultural exports and agricultural growth on economic growth. These findings have important policy implications in agricultural development policy design and implementation in ECOWAS countries.

The Effect of Technological Innovation on Economic Growth: Evidence from ECOWAS Countries

This study examines the impact of technological innovation on economic growth in the Economic Community of West African States (ECOWAS) from 2008 to 2020, which are lacking behind in terms of their innovation activities. Technological Innovation has a crucial impact on improving the productivity of human and physical capital which will translate to higher economic growth. Given the importance of technological innovation to economic growth, this study empirically investigates the effect of technological innovation on economic growth in these countries and examines how the improvement in human capital, foreign direct investment, institutions, physical capital and annual population growth can stimulate economic growth. The study employed a panel model with a fixed effect, two-ways and time random effect estimation method which helps to observe the heterogeneities in these countries. The study found that technological innovation has a negative impact on economic growth in these countries which is due to its poor institutions and the inability of their governments to formulate and implement policies that will promote human capital development that will produce meaningful technological innovation and/or effectively utilize existing ones.

Convergence in ecological footprint across the member states of ECOWAS: evidence from a novel panel unit root test.

In this paper, we investigate the convergence in ecological footprint per capita across the ECOWAS (Economic Community of West African States) countries from 1968 to 2017. For this aim, we apply a panel Fourier threshold unit root test recently proposed by Yilanci et al. (2021). This methodology considers both multiple smooth structural changes and nonlinearity, which allows us to get more reliable results. The results of the study support the evidence of nonlinearity for the series, so we test the null of divergence in a nonlinear framework. Since test statistics are statistically significant, we conclude that there is global convergence for the sample. Besides, we find that the type of convergence is absolute, which supports the view that the ecological footprint of the ECOWAS countries will equalize in the long run, and the emission allocation policies should be given priority by policymakers.

The impact of the shadow economy on economic growth and CO2 emissions: evidence from ECOWAS countries.

The Economic Community of West African States (ECOWAS) is one of the most dynamic African sub-regional organizations in several areas, such as economic integration and environmental conservation. On the other hand, it is also one of the sub-regions with the largest size of the shadow economy in the world. This article empirically explores the impact of the shadow economy on economic growth and CO2 emissions in ECOWAS countries. Using system generalized method of moment (SGMM) and common correlated effects mean group (CCEMG) estimators on annualdata from 14 ECOWAS countries over the period 1991-2016, the results suggest that the shadow economy decreases economic growth and CO2 emissions. However, the impact of the shadow economy on economic growth is more significant and higher than that on CO2 emissions. The results also indicate that industrialization and urbanization tend to increase economic growth and CO2 emissions in these countries.

Financial Integration and Economic Performance: Comparative Evidence from SADC and ECOWAS Regions

This paper examined the impact of financial integration on economic growth in Southern African Development Community (SADC) and Economic Community of West African States (ECOWAS) countries over the period 1993–2013. Using the Panel ARDL PMG Model developed by Pesaran and Shin, other control variables (trade openness, inflation, government expenditure, and institutional quality) were captured in the model. It was found that there is a significant and positive impact of financial integration on economic growth in the ECOWAS region in the long run. Whereas, even after controlling for necessary variables, financial integration exacerbates negative and insignificant effects in determining economic growth in the SADC region, both in the short run and long run. The insignificant and negative impact of financial integration on the region’s economic growth was attributed to several possible factors, including the low level of financial development in the SADC region, which is unconnected with the poor level of governance, unstable and fragile financial stability, or low creditworthiness, that are prevalent in developing countries like those in SADC countries. The findings suggest, amongst others, that increasing financial integration could improve the productive capacity of the economy, including more investments and the efficient allocation of capital, thus enhancing economic growth in these regions. This paper sheds new insights on a better evaluation of the past and present theorizing on the subjects of financial integration and economic growth, especially in comparing the separate effects on the economies of the SADC and ECOWAS countries.

Load Flow Study of Togo and Benin Transmission Power Network by the Newton-Raphson Method

Within the framework of the Economic Community of West African States (ECOWAS) countries power networks interconnection project carried by the West African Power Pool (WAPP), operating guidelines have been defined by WAPP and ECOWAS Regional Electricity Regulatory Authority (ERERA) to ensure efficient operation of the interconnected network. Each operator is obliged to comply with these directives to guarantee the stability and reliability of energy supply to ECOWAS countries. The purpose of this paper is to carry out the study of the power flow on the existing Togo and Benin power transmission network and to propose solutions for compliance with the requirements relating to the voltage level required on the interconnection lines or at connection points with neighboring power network operators. The dynamic stability of generators will also be studied to assess the behavior of the network during major disturbances. CEB (Communauté Electrique du Bénin in french) is the power transmission network operator of the Republic of Togo and the Republic of Benin. After the inventory of CEB transmission and production infrastructure and the consumption report, the model of CEB power network is produced as well as the single-line diagram. The power flow calculation is performed with the Newton-Raphson algorithm and the node voltages were calculated using the Cyme software. From the voltage values obtained at the various nodes and depending on the behavior of each generator, solutions are proposed to improve the voltage plan of the power network in accordance with the recommendations of the Regulatory Authority.

Unlocking Factors Driving Import Demand in ECOWAS Countries: Evidence from a Heterogeneous Panel ARDL Analysis

This study examines the factors determining the demand for imports of the member countries of the Economic Community of West African States (ECOWAS) over the period from 1980 to 2017. As a modelling strategy, we employ the Common Correlated Effect Mean Group (CCEMG) estimator that accounts for both heterogeneity and cross-sectional dependence across countries. The study provides various pieces of evidence through whole-panel and country-level analyses. The results from the panel analysis indicate that income, relative price of imports, foreign direct investment and remittances are significant determinants of import demand in ECOWAS. Income, relative price and remittances have, on average, positive effect on import in the long run. In the short run, all explanatory variables are positively related to imports. Country-level results reveal, however, considerable heterogeneity across countries in the relationship between import demand and its determinants.

СТАТИСТИЧЕСКИЙ АНАЛИЗ ИНФЛЯЦИИ И УСЛОВИЙ ВНЕДРЕНИЯ ЕДИНОЙ ВАЛЮТЫ В ЭКОВАС

The article deals with the results of statistical analysis of inflation and possible conditions for the introduction of a single currency in the economic community of West African states (ECOWAS). The ECOWAS countries have failed to create a monetary union for reasons of failure to meet the criteria of economic convergence. This project has been under discussion for half a century. The article, using methods of statistical analysis, assesses the conditions for the creation of a single currency and identifies the factors affecting inflation in ECOWAS. The analysis shows that the creation of a single currency in ECOWAS could reduce the overall price level, as evidenced by the processes in the countries of the Economic and Monetary Union of West African States (UEMOA) after the creation of the FCFA currency. The study identifies the determinants of inflation in ECOWAS and assesses the main convergence criteria for the creation of a single currency. However, it was found that the conditions for the implementation of a single currency area are not realized.

Economic and Monetary Integration in ECOWAS Countries: A Panel VAR Approach to Identify Macroeconomic Shocks

This paper studies the impact of output, exchange rate, price, and economic policies (fiscal and monetary) shocks to Economic Community of West African States (ECOWAS) economies over the period 1977-2019. The results of the impulse response functions obtained from the panel VAR show that monetary policy shocks stimulate economic activity, whereas fiscal shocks lead to a contraction. Moreover, these economic policy shocks lead to an increase in the price level. Finally, they have opposite effects on the real exchange rate: a monetary policy shock leads to an appreciation of national currencies against the US dollar, while a fiscal innovation leads to a depreciation of these currencies. As for exchange rate and price shocks, they create inflation and consequently a decline in economic activity. Furthermore, the forecast error variance decomposition reveals that real exchange rate shocks contribute the most to future fluctuations in macroeconomic variables in ECOWAS countries. Moreover, a comparison of the impact on the two currency areas, West African Economic and Monetary Union (WAEMU) and West African Monetary Zone (WAMZ), shows the degree of asymmetry between the two areas. The analysis shows, on the one hand, that shocks are more persistent and significant in the WAMZ and, on the other hand, that except for real exchange rate shocks, the two zones respond asymmetrically to shocks emanating from the other variables.

English

The study investigated the association between employment dynamics and fiscal policy in Economic Community of West African States (ECOWAS). The study focused on the 15 memberships of ECOWAS from 1990 to 2019. ?h? study made use of Keynes’ theory, from which a simple model was formed. The variables used in the model were employment, government expenditure, and tax revenue. ?ut?r?gr?ss?v? d?str?but?d l?g (?RDL) was adopted because of the nature of the unit root test. The result of the paper showed that in the long-run, both government expenditure and tax revenue are significant in determining employment level in ECOWAS; government revenue has a negative significant effect on employment and tax revenue has a positive significant effect on employment. The study recommended that only tax revenue can boost employment levels in ECOWAS countries. Therefore, the government should make use of tax revenue to create more employment rather than using government expenditure, which has not been productivity over time.   Key words: Employment dynamics, fiscal policy, autoregressive distributed lag (ARDL) approach.

Fiscal Policy, Private Consumption, and Economic Growth among the Economic Community of West African States

This study examines the impact of fiscal policy and private consumption on economic growth among the Economic Community of West African States (ECOWAS) spanning from 1988 to 2017 using the Panel Pool Mean Group. The results depicted that the government’s recurrent expenditure for growth was inversely but significant to economic growth, while capital expenditure was positively and statistically significant to explain economic growth in Nigeria. It can be seen that capital expenditure is vital for economic growth. Besides, private consumption’s negative effect on economic growth was a disconnection between economic output and private consumption. The results further showed that tax revenues in ECOWAS countries had a positive and significant influence on economic growth. Therefore, the study recommends re-visit government policy(ies) channeling government spending to increase ECOWAS output rates and spur regional economic growth.

Foreign Direct Investment and Economic Performance Nexus in ECOWAS: Does Human Capital Matters?

Human capital is an important channel through which foreign investment impact on economic performance and this has either been neglected or not given adequate attention by researchers. This paper therefore examined the nexus between foreign direct investment (FDI) and economic performance of Economic Community of West African States (ECOWAS) considering the imperative of human capital channel. A panel of 13 ECOWAS countries from 1980 to 2018 was utilised in a panel cointegration and autoregressive distributed lag estimation. The results indicated that FDI had a positive effect on economic performance of ECOWAS sub-region in the short run, and the effect became significant in the long run. Findings also revealed that human capital hindered the economic performance effect of FDI in ECOWAS, in the short rum and long run through life expectancy, but with a very weak positive impact through education in both time horizons. The paper recommended, amongst others, that ECOWAS as a body and her member nations should establish and entrench policies that would encourage FDI inflow and promote human capital in the sub-region Keywords: foreign direct investment, human capital, economic performance, ECOWAS DOI: 10.7176/RJFA/12-8-07 Publication date: April 30 th 2021

Role of governance in open trade policies–growth nexus in ECOWAS countries: The use of extended IV approach in panel data

The work assesses whether the effect of open trade policies-OTP on growth is dependent on the level of governance quality in the Economic Community of West African States (ECOWAS) countries. We estimate a non-linear growth equation that interacts OTP with governance. Based on the cross-sectional dependence test, we use the Driscoll–Kraay approach and mainly an extended instrumental variables-IV approach (fixed effect + IV approach also controls the endogeneity issue) to control the correlation between units. The basic regressions without interaction terms indicate that good governance itself is essential for growth while economic growth decreases with the level of OTP. The findings from the non-linear growth equation indicate that while the effect of OTP on growth increases as the institutional quality improves, it changes from statistically significant in the negative direction for bad institutional quality to statistically significant in the positive direction for better institutional quality. These findings suggest that ECOWAS countries must improve their institutional quality to increase the positive effect of OTP on growth.

General Equilibrium Effects of Trade Liberalization in ECOWAS Countries: Structural Gravity Approach

This study estimates the general equilibrium effects of the Economic Community of West African States (ECOWAS) free trade agreement, established in 1990, using the structural gravity model. Following the Anderson et al. (2015) methodology, we used country fixed effects as a proxy for multilateral resistance terms, which are considered as general equilibrium trade costs, to estimate the effects of regional trade liberalization on the ECOWAS member countries welfare. This study used data on 45 partners’ industrial trade flows from 1980 to 2006. The results indicate that trade liberalization has had positive effects on ECOWAS members welfare, via consumer or producer welfare channels. The latter channel induces an important change in real GDP relative to the former channel-countries with higher levels of producer welfare than consumer welfare experience greater changes in real GDP.

Economic Community of West African State’s (ECOWAS) Controversy: Wither a Need for Single Currency by 2021?

The business cycles in the West African Monetary Zone (WAMZ) as well as West African Economic and Monetary Union (WAEMU) using real GDP growth within 1980-2019, detrended by Hodrick–Prescott filters were analyzed. The Pearson correlation analysis on the computed z-scores was employed to examine the level of synchronization of business cycles, the level of symmetry in macroeconomic policies and the level of symmetry in trade flows. It was evident that business cycles synchronization was on the whole increasing, but with higher intensity within WAEMU region than within WAMZ region where only Ghana-Guinea, Ghana-Nigeria, Guinea-Gambia as well as Guinea-Nigeria as pairs were significantly synchronized. Symmetry in macroeconomic policies was on the whole minimal within ECOWAS region. The flow of trade however within ECOWAS region was asymmetric between Cote d’Ivoire and other WAEMU countries and between Nigeria and other WAMZ countries, but was symmetric between other ECOWAS countries, indicating that these economies rely more on transaction with other developed economies. The empirical results provided a direction for countries with synchronized business cycles such as Ghana, Guinea, Gambia and Nigeria to consider proceeding in the creation of the second West African monetary union (SWAMU) while also creating an enabling environment for other countries within WAMZ to join in due course. The study recommended among others that any country under WAEMU without strong similarities with other countries as pairs should disengage from WAEMU. On the converse, countries with strong similarities as pairs should unilaterally realign their exchange rate.

Eco 2020: Monetary Policy for the Future Central Bank and Economic Development in West Africa

In a context where international political and diplomatic weight also weighs in the game of international monetary cooperation, regional monetary policy can offer to West African countries an opportunity to strengthen their individual and collective position in terms of development, within international cooperation. This vision, based not on the contribution to the resolution of internal monetary problems, but envisaged as an instrument to stem monetary shocks coming from the outside, has not been sufficiently recognized and analyzed, both in the theoretical literature and in considerations of policy makers. Better consideration of this dimension could help steer the debate on monetary integration in the right direction: that of rapid progress towards the single currency. The general objective of this paper is to propose to the political powers, a common monetary policy, able to inject the new dynamism into the economic development of ECOWAS (Economic Community of West African States) countries. This general objective is divided into two specific objectives: analyze the theoretical, economic and political challenges of ECOWAS monetary policy; and to propose a monetary policy adapted to the economic contexts of the ECOWAS countries, and able to inject the new dynamism into the economic development. To achieve these objectives, we carried out a documentary review of the monetary policies currently underway in the countries of West Africa. Next, we relied on the Autoregressive Vector Model with Panel Interactions (IPVAR), following the methodology proposed by Towbin, Pascal & Weber, Sebastian. An effective monetary policy of the future ECOWAS central bank can boost the development of West African countries.

COVID-19 pandemic in Economic Community of West African States (ECOWAS) region: implication for capacity strengthening at Point of Entry.

Free movement between countries without a visa is allowed within the 15-country Economic Community of West African States (ECOWAS) region. However, little information is available across the region on the International Health Regulation (IHR 2005) capacities at points of entry (PoE) to detect and respond appropriately to public health emergencies such as Coronavirus Disease 2019 (COVID-19). ECOWAS and the member states can better tailor border health measures across the region by understanding public health strengths and priorities for improvement at PoEs. A comprehensive literature review was combined with a self-assessment of capacities at PoEs across the fifteen member states from February to July 2020. For the assessment, the member states completed an adapted World Health Organization (WHO) self-assessment checklist by classifying capacity for seven domains as fully, partially, or not implemented. The team implemented three focus group discussion (FGD) sessions and 13 key informant interviews (KII) with national-level border health stakeholders. Univariate analysis was used to summarize the assessment data and detailed content analysis was applied to evaluate FGD and KII results. Of the 15 member states, 3 (20%) are landlocked; 3 (20%) have more than one seaport. Eleven (73%) countries have 1 designated airport, 3 (20%) have two airports, and only one country (6.7%) has three airports. Two hundred and seventy-eight designated ground crossings were identified in 12 countries (80%). Strengths across the PoE were existence of decrees and ministerial acts in some ECOWAS countries and establishment of national taskforces for the COVID-19 response at PoE in ECOWAS. Major challenges were porous borders, poor intersectoral coordination, lack of harmonized traveler screening measures, shortage of staff, and inadequate financial resources. Despite all these challenges, there are opportunities such as leveraging the regional cross-border poliomyelitis coordination and control mechanism, and existence of networks of infection prevention and control specialists and field epidemiologists. However, political instabilities in some countries pose a threat to government commitments to PoE activities. The capacity to respond to public health emergencies at PoE in the ECOWAS region is still below IHR standard. Public health capacities at a majority of IHR-designated PoE in the 15-country region do not meet required core capacities standards.

Effect of emigration on the structural transformation of the economic community of West African states

The objective of this paper is to study the effect of emigration on the structural transformation of the Economic Community of West African States (ECOWAS). Structu- ral transformation is measured by the reallocation of labor from the industrial sector and services sector. The dynamic ordinary least squares method is used and has revealed that emigration contributes negatively to the reallocation of labor from the industrial sector. Only the total emigration rate negatively affects the reallocation of labor from the service sector. No statistical relationship exists between other emigration rates and the reallocation of labor from the service sector. ECOWAS countries should encourage policies aimed at capitalizing on the skills of emigrants through summer schools, following the example of the African Development Bank. They should also support industrial development while encouraging the agricultural production of intermediate goods for industrial production. This synergy promotes the reallocation of labor from the agricultural sector to the industrial sector and then to the service sector and leads to the structural transformation of economies, so much desired by the African Union.