Economic Growth In West Africa Research Articles

The impact of foreign direct investment inflows on unemployment and economic growth in West Africa

Purpose: This study explores the short- and long-run effects of foreign direct investment inflows (FDI) on both the unemployment rate and economic growth in West Africa utilizing a panel dataset spanning from 1991 to 2022. The precise impact of FDI on these variables and the underlying factors shaping this relationship in West Africa has not been definitively delineated. Previous literature has not exclusively delved into the impact of FDI on the unemployment rate in this region. Consequently, our paper endeavors to address this particular gap in knowledge concentrating on the individual countries within West Africa. Design/Methodology/Approach: We employ Pooled Mean Group (PMG) estimators and fixed effects models for our analyses. Findings: Our findings based on the PMG models unveil that FDI exhibits an insignificant positive long-term effect and a highly significant negative short-term impact on economic growth in West Africa. Similarly, we observe that the impact of FDI on the unemployment rate is negative both in the long- and short-term. Conclusion: Our findings demonstrate that various factors contribute to how FDI influences the unemployment rate and economic growth rate in West Africa. Research Limitation: The results of these models analyses are subject to the considered economic variables. Other economic variables could give different results. Practical Implication: The research findings imply that FDI cannot be relied upon as a comprehensive strategy to either stimulate economic growth or alleviate unemployment in the Western Africa region.

Building Resilience for Transformational Recovery: An Analysis of Monetary Policy and Economic Growth in West Africa before and Following the COVID-19 Periods

This study investigates the effectiveness of monetary policy in the pre and post COVID-19 periods in West Africa. The panel fully modified ordinary least squares (FMOLS) was used. Before the estimation, the correlation analysis and summary statistics were done. Unit root test was carried out to ascertain whether the data series are stationary or not and the panel cointegration test was used to determine the existence of long run relationship among the variables. The findings indicate that monetary policy has 12.3% negative and significant effects on economic growth in the periods before COVID-19, while it has insignificant effect after the pandemic. Furthermore, monetary policy has 21.01% negative and significance effects on inflation in the pre COVID-19 era, while it has 52.5% negative and significant effect on inflation after the pandemic. This indicates that the effectiveness of the central bank’s efforts to affect and control inflation has declined after COVID-19. Causes for this could include the pandemic’s effect on supply chains, demand, and the weaker economic environment. On this basis, the monetary authority should create an economic environment that will play a crucial role in determining the effectiveness of monetary policy in the post-COVID-19 periods to foster economic recovery.

Human capital, capital goods import and economic growth in West Africa

Human capital, capital goods import and economic growth in West Africa

Exploring the moderating role of foreign direct investment in the renewable energy and economic growth nexus: Evidence from West Africa

This study contributes to the renewable energy consumption and economic growth discourse by examining how foreign direct investment moderates this relationship for a panel of 15 West African countries from 1990 to 2021. Applying the Panel-Corrected Standard Errors and the Feasible Generalized Least Squares techniques, the study shows that renewable energy consumption hinders economic growth in West Africa. In addition, foreign direct investment is found to have a positive impact on economic growth. The findings further reveal that the interaction between renewable energy consumption and foreign direct investment has a positive impact on economic growth. Thus, foreign direct investment boosts renewable energy consumption to positively impact economic growth in West Africa.

Globalization and Economic Growth in West Africa (1990 - 2019)

This study investigated the impact of overall and economic globalizations on economic growth in West Africa between 1990 and 2019.Data were sourced secondarily from the World Development Indicators (WDI) and Konjunkturforshungsstelle (KOF) data base.The study employed Pooled Ordinary Least Suare (OLS) and Fixed effect OLS for data analysis.The result obtained from sPooled OLS revealed that overall globalization had significant and positive impact on economic growth in West Africa while the result from Fixed effect showed otherwise.Further,the result from Pooled OLS also showed positive and significant effect of economic globalization on economic growth while the result from the Fixed effect showed no impact of economic globalization on economic growth in West Africa.Therefore, the study recommended that Government policy should adopt overall globalization as a major factor of economic growth.Also, Government should formulate policy to encourage trade openness,Foreign Direct Investment (FDI) and capital inflows which are the major platform upon which economic globalization rested.

The Effect of Natural Resources on Economic Growth in West Africa: The Mediating Role of Human Capital Disaggregation

The purpose of this paper is to examine the conditional impacts of natural resources on economic growth through human capital development. This study employs Dynamic Ordinary Least Squares (DOLS) and Vector Error Correction Model (VECM) methodologies in a panel dynamic analysis. The research demonstrates that natural resources and trade openness are the key contributors to lower economic growth. On the other hand, labour force, physical capital, and human capital development measures are effective in boosting growth. Furthermore, the estimates are much higher in the model of tertiary school enrolment (TSE) than in the model of secondary school enrolment (SSE). This means that TSE performs better than SSE in terms of augmenting natural resources to improve growth. From a policy aspect, governments in such nations should devise policies that will improve human capital. The emphasis must be on improving tertiary education quality.

The Nexus among Energy Consumption, Economic Growth and Trade Openness: Evidence from West Africa

The West African region has experienced high economic development. With the increasing energy consumption and emissions, how to coordinate the relationship among energy consumption, trade opening, and economic growth, and how to develop a low-carbon development pattern are becoming the most important issues in West Africa. This paper uses the tri-variable Toda-Yamamoto model to investigate the dynamic interactions among energy consumption, economic growth, and trade in West Africa. The findings indicate that, first, the positive impact of energy consumption on economic growth in West Africa has shown a significant lag effect, and energy consumption has a strong trade-dependent relationship to economic promotion. Trade opening and economic growth in West Africa are mutually reinforcing in the long run. Next, the role of foreign trade in boosting economic growth is more significant in countries with lower levels of economic development. Finally, when replacing the energy consumption indicator with CO2 emissions, the results remain robust. Considering the regional development differences, grouping countries by GDP per capita reveals that there exists a bilateral causal relationship between energy consumption and trade openness in the higher economic development group. The impact of trade openness on economic growth is more remarkable in countries with lower levels of economic development in West Africa. The findings have important implications for policymakers in understanding the economic development pattern of West Africa. It is necessary for West African countries to develop an integrated energy and trade policy in order to maintain long-term sustainable economic growth.

The relationship between globalisation and economic growth in West Africa

Economic integration among countries, as a result of globalisation, could be beneficial to trading partners if properly handled through appropriate regulation of production, distribution, and consumption. However, it appears developing countries often do not benefit from their economic relations with other countries at advanced stages of developed. It is in view of this that this research was conducted with concentration on West Africa. In this study Panel Cointegration Techniques including Fully Modified Ordinary Least Squares, Dynamic Ordinary Least Squares and Dumitrescu-Hurlin Panel Causality Test were applied using time series on Gross Domestic Product, Exports, Imports and Foreign Direct Investment of eight West African countries from 1960–2019. While a positive and significant long run causal relationship was found between Exports, Imports as aspects of globalisation and Gross Domestic Product, there was an observed negative long run relationship between Foreign Direct Investment and Gross Domestic Product. Export promotion, hight import tariffs, the local content initiative, liberal migration policies and strong regulatory machinery were recommended.

The effects of the COVID-19 pandemic on economic growth in West Africa: the case of ECOWAS

Resume Parallelement aux preoccupations relatives aux couts sanitaires, l'impact que COVID-19 pourrait avoir sur les aspects socio-economiques est une preoccupation mondiale. Les pays de l’Afrique de l’Ouest, comme le reste des pays d'Afrique subsaharienne peuvent etre particulierement vulnerables aux chocs externes associes a la pandemie. L’objectif principal de cet article est de mettre en lumiere les repercussions economiques de la pandemie COVID19 sur les economies de la zone CEDEAO et ce a travers une analyse descriptive des indicateurs Macroeconomiques des cinq puissances economiques membres de l’espace CEDEAO. Nous avons choisi le Nigeria, le Ghana, la Cote d’Ivoire, le Senegal et le Burkina Faso. Ces cinq pays assurent 89,54 % du Produit Interieur Brute de la communaute economique Ouest Africaine. Les resultats de la presente etude montrent que la covid-19 a influence negativement sur la croissance economique de l’espace CEDEAO. Au cours de cet article, nous avons presente, dans un premier temps, un cadre general sur la propagation de la Covid-19 et son impact sur l’economie mondiale, ce qui nous a permis, dans un deuxieme temps, de ressentir l’ampleur de l’impact de la pandemie sur les cinq puissances economiques, locomotives de developpement dans la zone CEDEAO. Mots cles : COVID-19, CEDEAO, Nigeria, Ghana, Cote d’Ivoire, Senegal, Burkina Faso Abstract In addition to concerns about health costs, the impact that COVID-19 may have on socioeconomic aspects is a global concern. West African countries, like the rest of subSaharan Africa, may be particularly vulnerable to external shocks associated with the pandemic. The main objective of this paper is to highlight the economic impact of the COVID19 pandemic on the economies of the ECOWAS zone through a descriptive analysis of the macroeconomic indicators of five member economies of the ECOWAS zone. We chose Nigeria, Ghana, Cote d'Ivoire, Senegal and Burkina Faso. These five countries account for 89.54% of the Gross Domestic Product of the West African Economic Community. The results of this study show that the pandemic has had a negative impact on economic growth in the ECOWAS region. In the course of this article, we first presented a general framework on the spread of Covid-19 and its impact on the world economy, which allowed us, in a second step, to feel the magnitude of the impact of the pandemic on the five economic powers, locomotives of development in the ECOWAS zone. Keywords: COVID-19, ECOWAS, Nigeria, Ghana, Ivory Coast, Senegal, Burkina Faso

Natural Resources and the Economic Growth of West Africa Economies

In this study, we employed the pooled mean group (PMG) regression to examine the effect of natural resources economic rent (coal rent, gas rent, oil rent, forest rent, minerals rent) and foreign direct investment (FDI) on economic growth in West Africa for the period 1996 to 2017. We found strong evidence of a positive relationship between FDI, total natural resources (TNR), total natural gas (TNG), and economic growth in the long-run. However, the study recorded a negative relationship between mineral resources rent, oil rent and gas rent, and economic growth in the long run. The rent from coal also exhibited neutrality on economic growth. While all the short-run coefficients are not statistically significant, the error correction term (ECT) is significant and a negative value of -0.889, signifying cointegration at a 1% significance level. This also implies that the short-run estimates converge towards the long-run estimates to achieve equilibrium at the speed of 89% per annum. Our findings highlight the significance of FDI and total rent from natural resources in stimulating West African economies' growth in the industrialization drive and general welfare. In contrast, this study also highlights the need for policy direction to redesign and realign ownership in the oil and gas sector from multinational co-operations (MNCs) to the locals and the domestic economy to benefit directly from the prevailing environment.

The Effect of Gender Inequality on Economic Growth in West Africa

Using panel data, this study examined how gender inequality affects economic growth in West Africa. The paper used data from 1997 to 2017 on GDP growth and three gender indicators. Nine countries in West Africa made up the study. The generalized method of moment (GMM) was the estimator used in estimating dependent variable and independent variables of the study. The dependent variable was GDP growth acting as a proxy for economic growth. The independent variables comprised of gender parity of primary school enrollment between female and male, labour participation ratio of female to male and gender inequality index (GII). The result of the study showed that at 1% level of significant, labour participation rate of female to male, gender parity in school enrollment and gender inequality statistically affect economic growth in West Africa. However, the outcome showed that whereas gender inequality adversely affects economic growth, increase in both participation rate of female and gender parity of school enrollment positively influence growth in West African economy. Population growth which was one of the controlled variables also showed a significant effect on economic growth. The study recommends that further studies should be conducted in area of job segregation and labour differences. Keywords : Gender Inequality Index (GII), Labour, femal, male, Economic DOI: 10.7176/JEP/11-24-08 Publication date: December 31 st 2020

Institutional Quality and Growth in West Africa: What Happened after the Great Recession?

This paper examines the impact of institutional quality on economic growth in West Africa after the Great Recession using a panel of 13 countries. In addition to the traditional institutional variables documented in the Worldwide Governance Indicators, such as government effectiveness, control of corruption, rule of law, regulatory quality, political stability, voice and accountability, and absence of violence/terrorism, the paper also derived an institutional-quality variable from the Freedom House database. To address the methodological shortcomings in the extant literature, the study used region-specific variables and adopted both the system generalized method of moments and the panel two-stage least squares estimation techniques under the framework of a cross-country growth model. The results predominantly showed a significant negative relationship between institutional quality and growth in West Africa. Specifically, corruption, government ineffectiveness, weak regulatory quality, political instability, lack of rule of law and absence of accountability were found to hinder growth in the sub-region. However, the empirical findings also showed an initial level of gross domestic product per capita, capital, labour and foreign direct investment as important drivers of growth in the sub-region. Therefore, the study concludes that the sub-region needs improved institutions that can attract higher levels of investment to promote sustained economic growth and development.

Corruption and Economic Growth in West Africa

The level of corruption in West Africa has become very worrisome based on the data from the corruption perception index of transparency international. Corruption may subvert due process; reduce accountability; lead to unequal distribution of goods and services and limit the reliance of the masses on government. The objective of the paper was to examine the link between corruption and economic growth in West Africa. Data used span from 2000 to 2018 with a cross section of fifteen West Africa countries and the use of panel fully modified ordinary least squares. With the use of the Im, Pesaran, and Shin stationarity which allows for heterogeneous version of the Dickey Fuller test, it was found that the variables used were integrated of order one and long run equilibrium relationship existed based on the Pedroni cointegration method. Only foreign direct investment did not meet the a priori expectation. The result supports the ‘grease on the wheel hypothesis’. This implies that corruption and economic growth have direct relationship in West Africa. Corruption and economic growth were found to also support the U-shaped hypothesis which means that different corruption level affect economic growth in different ways. However, corruption does not lead to efficient and effective outcomes hence should not be allowed at any level of governance.

Agricultural production and CO2 emissions from two sources in the ECOWAS region: New insights from quantile regression and decomposition analysis

Agriculture being the dominant economic activity of the West African economies is responsible for the most greenhouse gasses emitted in the region. Are there heterogeneous determinants of environmental degradation across low, intermediate, and high CO2 emitters in West Africa? Considering the significance of agriculture, industrial activities, renewable energy consumption and economic growth in West-Africa, this paper investigates the conditional determinants of environmental degradation from two sources (per-capita CO2 emission and CO2 emission from liquid sources) using panel data from 15 ECOWAS countries for the period 1990–2015. The study adopts a panel quantile regression technique with non-additive fixed effects as well as quintile decomposition techniques to explore if the relationship between agricultural and economic factors differs across low, intermediate, and high CO2 emitters and the extent of CO2 emission gap between Low Income Group (LIG) and Lower-Middle Income Groups (LmIG). Results from the mean estimators show that while agricultural production impedes CO2 emissions from liquid sources, it however increases total emissions implying a shift from mechanized farming to more traditional farming methods and the burning and use of biomass from agricultural produce as an energy source. Estimates of the conditional determinants of environmental degradation vary along the quantiles signifying heterogeneity of the determinants of environmental degradation across, low, intermediate, and high CO2 emitters. Additionally, results emanating from the quantile decomposition procedure show that lower-income West African economies have superseded their lower-middle income counterparts at higher quantiles of CO2 emissions.

Foreign Aid and Economic Growth in West Africa: Examining the Roles of Institutions

This study examines the roles of institutions on the relationship between foreign aid and economic growth in the 16 West African countries. Relying on panel data obtained from the World Bank’s world development and governance indicators, from 1996 to 2017, the study employs the autoregressive distributed lag technique in investigating the relationship. The empirical findings depict that foreign aid exerts a neutral effect on economic growth; the effect turns negative when the institutional variable is incorporated into the analysis. Again, the interaction effect of foreign aid and institution on economic growth is such that it reduces the negative effect of foreign aid on economic growth. The other factors of growth included are trade openness and government size, whose effects are positive and largely negative on the growth of the West African region, respectively. A significant policy implication from these findings is that the efforts of governments of the region should be directed towards building formidable economic, social and political institutions. This would not only reduce the negative impact of aid on growth but would also promote the competitiveness of the countries for private domestic and foreign capital; thus, reducing reliance on foreign aid.

Analyzing the Financial Development and Economic Growth in West Africa: With Specific Reference on Financial Economics

The financial sector development in developing countries and emerging markets is part of the private sector development strategy to stimulate economic growth and poverty reduction. It could be defined that, the financial sector is the set of institutions, instruments, and markets. This study analyzes the financial development and economic growth in West Africa with the main focus on financial development. The data were obtained from the world bank open data page website to estimate the financial development using dynamic panel data approach. The results show that official development assistance and broad money statistically has a significant impact on financial development in West Africa. It is therefore imperative that policymakers should implement policies that may attract official development assistance and broad money through regional stability, infrastructural improvement and creditors right reinforcement. It is also important to introduce reforms in the financial sector which may lead to a wide range of financial development. The coefficient of the speed of adjustment is small that is, it indicates a slow impact on the adjustment.

The impacts of foreign direct investment and globalisation on economic growth in West Africa: examining the role of political governance

PurposeThis paper measures the impacts of foreign direct investment (FDI), globalisation and political governance on economic growth in West Africa. The empirical analysis also includes the interaction effect of political governance and FDI on the growth of the sub-region, over the period of 1996–2016.Design/methodology/approachThe study employs the autoregressive distributed lag technique on data obtained from the World Bank and the KOF institute.FindingsThe study findings suggest a positive relationship between globalisation and political governance on economic growth. Even though there have been inconclusive results on the FDI–growth nexus, the authors found that FDI stimulates the growth of the sub-region, while political governance enhances the positive impact of FDI on economic growth. The other factors of growth included are labour, capital and government size, whose effects on growth are, respectively, negative, negative and positive.Practical implicationsThe governments of the West African countries promote policies that attract FDI into the sub-region, so that economic performances may be enhanced. In addition, the governments of the West African sub-region should work to reap the benefits of globalisation, by promoting the competitiveness of their local economies in order to keep pace with the global markets. Finally, the political-governance infrastructures should be overhauled; the culture of accountability and transparency should be promoted, while all efforts should be made to improve stability in the political environment in order to increase investors' confidence in the West African economy.Originality/valueThis study is the first to single out the impacts of political governance, as categorised by the World Bank, through both direct and interactive measures. This is necessary in view of the assertion that political governance largely accounts for improved economic performance in an economy. The use of the Pesaran (2007) technique of unit root is also a deviation from existing studies. This is in view of the fact that it tests variable unit root in the presence of cross-sectional dependence; thus, controlling for contemporaneous correlation which was not considered in the first-generation tests.

The role of foreign direct investment, financial development, democracy and political (in)stability on economic growth in West Africa

PurposeIn this research, we examine the role of financial development, FDI, democracy and political instability on economic growth in West Africa.Design/methodology/approachThe study uses the dynamic fixed effects technique on the secondary data obtained from 1996 to 2016.FindingsOur empirical findings suggest that even though no significant relationship is established in the short run, the long-run coefficient of FDI is found to be significant and positive; a 1% increase in FDI inflow into the West African sub-region results in a 0.26% increase in economic growth. The coefficient of democracy is significant neither in the short run nor in the long run, but political instability is found to significantly and negatively impact the growth of the countries. Finally, the estimate of financial development–growth nexus follows the supply-leading hypothesis.Research limitations/implicationsThis research affirms the proposition that FDI is a relevant means of technology and knowledge transfers, thus resulting in increasing returns to production as a result of productive spillovers, which drives the growth of the economy. Consequently, an efficient institution – where the rule of law, political stability and economic freedom are top priorities – is a key to accelerate the growth of the West African economy. Similarly, we confirm the validity of the supply-leading hypothesis in West Africa. As such, by deepening the financial system, the growth of the subregion is propelled because an efficient financial system is a basis for sustainable development.Practical implicationThe applicable policies are those that promote growth through FDI, financial development, democracy and political instability. The governments of West African countries are enjoined to promote policies that attract FDI into the subregion and promote financial sector credits so that economic performances may be enhanced. In addition, the governments of West African subregion should fully entrench democratic practices and enhance a stable and sustainable political environment. This will not only restore investor confidence but will also facilitate the inflow of FDI into the West African economy.Originality/valueOur study is the first to jointly examine these important growth determinants, especially in the context of West Africa. This becomes necessary in order to open the eyes of policy makers to the need for entrenched full democracy and to proffer sustainable cures to the frequent unrests in the subregion. The use of Pesaran (2007) technique of unit root is also a deviation from several existing studies. One advantage of this technique over others is that being a second-generation test, it tests variable unit root in the presence of cross-sectional dependence.

Human Development, Government Spending and Economic Growth in West Africa

This study verifies the role of government spending on the relationship between human development and economic growth in West African Countries using an extension of human development measure. We generate a new measure of human development that considered environmental influence by performing Principal Component Analysis on environmental variables such as: (i) Atmospheric Pollution (i.e. carbondioxide (CO2), (ii) emmissions, fossil fuel energy consumption, methane (CH4) and (iii) Nitrous (N2)) and incorporate welfare measures used by HDI (i.e. Education, Health and Income) to generate a scientifically weighted index (HDIGEN).The study employed Fixed effect method using annual time series data between 1980 and 2017. The results showed that human capital on its own is positively, statistically and significantly related with output. However, when human capital is interacted with government spending (GSHK), negative relation was found, but not statistically significant. These results might not be found wanton in the sense that all the countries under study are documented among the corrupt nations. Most of the funds meant for augmenting human capital might not be spent for the purpose for which they are meant. We found negative relationship between human development and output when we used the most common measure of human development (HDI) and the generated one (HDIGEN), but only the one generated was statistically significant. The results showed that measuring human development requires holistic approach of measure, especially consideration of environmental factors. When we interacted government spending with HDIGEN, we discovered positive relation and statistically significant results, while the interaction of government spending with HDI, showed negative and statistically insignificant results. The implication is that if government of these countries can be sincere in spending on improving environmental factors while focusing on improving human development, sustainable development goal can equally be achieved.

West Africa's CO2 emissions: investigating the economic indicators, forecasting, and proposing pathways to reduce carbon emission levels.

This paper investigates the nexus between carbon emissions (CO2) and economic growth in West Africa based on the Environment Kuznets Curve (EKC) hypothesis by utilizing spatial panel data technique to check the possible effect of spatial dependence among countries in West Africa. Our empirical findings suggest the presence of spatial dependence of carbon emissions distribution in West Africa. By examining the existence of EKC embedded within the Stochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) approach, we conclude an inverse N-trajectory of the relationship between carbon emissions and economic growth. Furthermore, to mitigate global carbon emissions, we utilize a recurrent neural network (RNN) bidirectional long short-term memory (BiLSTM) algorithm devoid of exogenous variables and assumptions to forecast carbon emissions from the year 2015 to the year 2030 based on the predictive accuracy of our formulated algorithm. Due to the upward trends in future emission levels, we propose emissions mitigation pathways for countries in West Africa to still hold carbon emissions-related global warming well below 1.5 and 2°C. Such mitigation pathways proposed could help implement strategic policies to minimize carbon emissions to a considerable level. As a policy implication, drafting strict environmental regulations and utilizing renewable energy technologies will help mitigate carbon emissions for all West African countries.