Towards Export-Led Growth in the West Africa Sub Region Economies

The policy of import substitution dominated developing economies especially Sub-Sharan African countries up till 1970. The focus later shifted to pursuing growth through increased export. Recently, countries of the West Africa Sub-region are clamoring for a revisit of growth through import substitution policies. This study therefore delved into the question of whether ECOWAS countries should go for import substitution growth strategy, or to develop strategy that promotes export-led growth, following the law of comparative advantage or a considerable mix of the two strategies. Using an export-augmented neoclassical production function, the study tested how relevant is the Export-led Growth Hypothesis for the ECOWAS sub-region over the period 1980-2014. Evidence does not offer a strong support for the Hypothesis in the short run but a strong evidence for improved capital stock and labor causing growth. However, long-run results suggest a significant relationship between export and growth but currently negative. A likely explanation of this negativity is that although exports, in the West African sub-regions has the tendency of increasing growth in the long run along with other factors of production, the present conditions of export, especially manufactured and agricultural exports, is experiencing a kind of “Import surge”. That is the import content of exports is high and the local content is low, thus reducing the spillover or multiplier effects. This was confirmed by the strong bilateral causality between export and import discovered in this study. A policy mix of import substitution and export promotion strategies was recommended for countries in this sub-region. Policies that will promote technological innovation in manufacturing and linkages with local suppliers alongside incentives to produce towards export are imperative. Production towards export should be focused on manufactured and agricultural products where each country has the highest comparative advantage so as to reduce the import content of the export.

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Towards Export-Led Growth in The West Africa Sub Region Economies

International Journal of Applied Research in Management and Economics ◽

10.33422/ijarme.v3i2.283 ◽

2020 ◽

Vol 3 (2) ◽

pp. 1-16

Author(s):

Raphael Kolade Ayeni

Keyword(s):

West Africa ◽

Comparative Advantage ◽

Developing Economies ◽

Import Substitution ◽

Strong Support ◽

Growth Strategy ◽

African Countries ◽

The West ◽

Long Run ◽

Short Run

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Institutions, Macroeconomic Policies and Economic Growth in Africa: Evidence from Panel Data

Journal of Asian Development ◽

10.5296/jad.v5i2.13241 ◽

2019 ◽

Vol 5 (2) ◽

pp. 112

Author(s):

Haruna M. Aliero ◽

Muftau Olaiya Olarinde

Keyword(s):

Economic Growth ◽

Growth Performance ◽

Panel Cointegration ◽

Growth Strategy ◽

African Countries ◽

Macroeconomic Policies ◽

Long Run ◽

Short Run ◽

Capital Development ◽

Poor Management

This study investigates the effects of institution and macroeconomic policy on economic growth in Africa, using panel Cointegration technique to analysed data obtained from a panel of 50 African Countries covering a period of 25years (1990-2014). The results confirm that declining growth rate in Africa is due to poor management of macroeconomic policies. A weak turning point is also confirmed to exist for government size in the short run; in the long run it becomes more pronounce. The Wald restrictions tests of causality ascertain that institutions lead economic growth performance in the short run, while poor economic growth performance impaired the capacity required in building strong institutions which in turn stunts growth in the long run. Therefore, African leaders should tilt their expenditure in favour of human capital development and strong institution, ensure intra-regional trade and adopt private sector led – economic growth strategy.

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Currency depreciation and output nexus: Evidence from Pakistan

Panoeconomicus ◽

10.2298/pan151222027n ◽

2018 ◽

Vol 65 (2) ◽

pp. 183-200

Author(s):

Muhammad Nawaz ◽

Ejaz Ghani

Keyword(s):

Open Economy ◽

Developing Economies ◽

Strong Support ◽

Annual Data ◽

Bounds Testing ◽

Policy Regime ◽

Currency Depreciation ◽

Long Run ◽

Negative Effect ◽

Short Run

Currency depreciation as a channel of output management has been a hot and controversial topic in both developed and developing economies. In Pakistan?s case, relevant research would require study of annual data available for the period 1972 to 2010. The stationarity of variables under consideration at different orders require the application of the bounds testing approach to cointegration. The findings based on open economy IS-LM framework induce a negative effect of currency depreciation on output levels. This is consistent with the long-run estimates of the autoregressive distributive lag (ARDL) model. The short-run estimates of error-correction model (ECM) may lead to significant increment in output levels because of the depreciation of Pakistan rupee. Government spending may cause to reduce the output in the short-run, as well as, in long-run which furnishes strong support to crowding out hypothesis. The terms of trade, positive in the short-run, are negatively related to output in the long-run. However, surprise money has been insignificant in both long-run and short-run ECM. The country would need a clear long-term policy regime that inspires trust of the international community and restores the exporters? confidence.

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Institutional Quality and Financial Sector Development: Empirical Evidence from Nigeria

American Journal of Business and Management ◽

10.11634/216796061706919 ◽

2018 ◽

Vol 7 (1) ◽

pp. 1 ◽

Cited By ~ 1

Author(s):

Fisayo Fagbemi ◽

John Oluwasegun Ajibike

Keyword(s):

Empirical Evidence ◽

Financial Development ◽

Good Governance ◽

Developing Economies ◽

Institutional Quality ◽

Financial Sector ◽

African Countries ◽

Financial Sector Development ◽

Long Run ◽

Short Run

In view of the indispensable role of financial sector in both emerging and developing economies, there has been a notable spotlight on the financial sector development over the years in most African countries. Nonetheless, there are only a few studies on this topical issue, particularly for Nigeria. Hence, this study examines the long – run and short – run dynamic relationship between institutional quality and financial development in Nigeria over the period of 1984 – 2015 using Auto-Regressive Distributed Lag (ARDL) bounds test approach to cointegration. Using two different indicators (Private credit and M2) of financial development, the results consistently show that institutional factors do not have significant effect on financial development in the long – run as well as in the short – run. Furthermore, the empirical evidence indicates that regulatory quality and governance system (institutions) do not necessarily contribute to financial development in a feeble institutional environment, specifically in Nigeria. Thus, our findings suggest that whilst weak institutions could increase the risk of limiting the functioning of financial system, good governance and strong institutions are the essential ingredient of financial development in Nigeria. As a consequence, policies aimed at strengthening the quality of institutions and governance should form the major policy thrust of government (policy makers). These could help improving financial sector development in Nigeria.

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

International Trade Politics and Development ◽

10.1108/itpd-01-2020-0002 ◽

2020 ◽

Vol 4 (1) ◽

pp. 27-46

Author(s):

Hammed Agboola Yusuf ◽

Waliu Olawale Shittu ◽

Saad Babatunde Akanbi ◽

Habiba MohammedBello Umar ◽

Idris Abdulganiyu Abdulrahman

Keyword(s):

Economic Growth ◽

West Africa ◽

Financial Development ◽

Political Instability ◽

West African ◽

The West ◽

Content Type ◽

Long Run ◽

Short Run

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.

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LABOR MARKET DYNAMICS UNDER TECHNOLOGY SHOCKS: THE ROLE OF SUBSISTENCE CONSUMPTION

Macroeconomic Dynamics ◽

10.1017/s136510052100016x ◽

2021 ◽

pp. 1-29

Author(s):

Sangyup Choi ◽

Myungkyu Shim

Keyword(s):

Labor Market ◽

Business Cycle ◽

Developing Economies ◽

Structural Var ◽

Market Dynamics ◽

Technology Shocks ◽

Structural Factors ◽

Long Run ◽

Labor Market Dynamics ◽

Short Run

This paper establishes new stylized facts about labor market dynamics in developing economies, which are distinct from those in advanced economies, and then proposes a simple model to explain them. We first show that the response of hours worked and employment to a technology shock—identified by a structural VAR model with either short-run or long-run restrictions—is substantially smaller in developing economies. We then present compelling empirical evidence that several structural factors related to the relevance of subsistence consumption across countries can jointly account for the relative volatility of employment to output and that of consumption to output. We argue that a standard real business cycle (RBC) model augmented with subsistence consumption can explain the several salient features of business cycle fluctuations in developing economies, especially their distinct labor market dynamics under technology shocks.

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Implications of Governance, Natural Resources, and Security Threats on Economic Development: Evidence from Sub-Saharan Africa

International Journal of Environmental Research and Public Health ◽

10.3390/ijerph18126236 ◽

2021 ◽

Vol 18 (12) ◽

pp. 6236

Author(s):

Husam Rjoub ◽

Chuka Uzoma Ifediora ◽

Jamiu Adetola Odugbesan ◽

Benneth Chiemelie Iloka ◽

João Xavier Rita ◽

...

Keyword(s):

Economic Development ◽

Natural Resources ◽

Causal Effect ◽

Sub Saharan Africa ◽

Security Threats ◽

African Countries ◽

Significance Level ◽

Long Run ◽

Short Run ◽

Sub Saharan

Sub-Saharan African countries are known to be bedeviled with some challenges hindering the economic development. Meanwhile, some of these issues have not been exhaustively investigated in the context of the region. Thus, this study aimed at investigating the implications of government effectiveness, availability of natural resources, and security threats on the regions’ economic development. Yearly data, spanning from 2007 to 2020, was converted from low frequency (yearly) to high frequency (quarterly) and utilized. Data analysis was conducted using Dynamic heterogeneous panel level estimators (PMG and CS-ARDL). Findings show that while PMG estimator confirms a long-run causal effect of governance, natural resources, and security threats on economic development, only natural resources show a short-run causal effect with economic development, while the CS-ARDL (model 2) confirms the significance of all the variables both in the long and short-run. Moreover, the ECT coefficients for both models were found to be statistically significant at less than 1% significance level, which indicates that the systems return back to equilibrium in case of a shock that causes disequilibrium, and in addition, reveals a stable long-run cointegration among the variables in the model. Finally, this study suggests that the policy makers in SSA countries should place more emphasis on improving governance, managing security challenges, and effectively utilizing rents from the natural resources, as all these have severe implications for the economic development of the region if not addressed.

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Determinants of Insurance Penetration in West African Countries: A Panel Auto Regressive Distributed Lag Approach

Journal of Risk and Financial Management ◽

10.3390/jrfm14080350 ◽

2021 ◽

Vol 14 (8) ◽

pp. 350

Author(s):

Odunayo Olarewaju ◽

Thabiso Msomi

Keyword(s):

Banking Sector ◽

West African ◽

Education Sector ◽

African Countries ◽

Distributed Lag ◽

Long Run ◽

Short Run ◽

Auto Regressive ◽

Insurance Penetration ◽

The Government

This study analyses the long- and short-term dynamics of the determinants of insurance penetration for the period 1999Q1 to 2019Q4 in 15 West African countries. The panel auto regressive distributed lag model was used on the quarterly data gathered. A cointegrating and short-run momentous connection was discovered between insurance penetration along with the independent variables, which were education, productivity, dependency, inflation and income. The error correction term’s significance and negative sign demonstrate that all variables are heading towards long-run equilibrium at a moderate speed of 56.4%. This further affirms that education, productivity, dependency, inflation and income determine insurance penetration in West Africa in the long run. In addition, the short-run causality revealed that all the pairs of regressors could jointly cause insurance penetration. The findings of this study recommend that the economy-wide policies by the government and the regulators of insurance markets in these economies should be informed by these significant factors. The restructuring of the education sector to ensure finance-related modules cut across every faculty in the higher education sector is also recommended. Furthermore, Bancassurance is also recommended to boost the easy penetration of the insurance sector using the relationship with the banking sector as a pathway.

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Impact of Environmental Tax on Comparative Advantage of Food and Food Products: A Study of G20 Countries in Light of Environmentally Sensitive Goods

The Indian Economic Journal ◽

10.1177/00194662211035273 ◽

2021 ◽

pp. 001946622110352

Author(s):

Alisha Mahajan ◽

Kakali Majumdar

Keyword(s):

Comparative Advantage ◽

Food Products ◽

Environmental Taxes ◽

Environmental Tax ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run ◽

Environmentally Sensitive ◽

The Relationship

Many countries are under constant fear that environmental policies might negatively influence the international competitiveness of polluting industries. In this study, we aim to evaluate the relationship and impact of the environmental tax on comparative advantage of trade in food and food products industry, considered to be one of the highly environmentally sensitive industries. This study also investigates, whether this relationship differs among countries covered in G20, with the help of correlation analysis. We select panel autoregressive distributed lag approach for this study as it can analyse long-run as well as short-run association even when the variables are stationary at different orders of integration. Using panel data from G20 countries over the period of 21 years that is from 1994 to 2015, it is concluded that when we allow environmental taxes to interact with the revealed comparative advantage (RCA) of G20 nations, the overall impact of the environmental tax on the RCA is negative in the long period. It is therefore suggested that countries should follow Porter hypothesis to stimulate innovations resulting from strict environmental regulations that affect the environment in least possible manner. JEL Codes: C01, C23, C33, F18, O57, Q5

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The Effect of Real Exchange Rate on Trade Balance in a Resource-Rich Economy: The Case of Mongolia

Foreign Trade Review ◽

10.1177/0015732518797184 ◽

2018 ◽

Vol 53 (4) ◽

pp. 211-224 ◽

Cited By ~ 2

Author(s):

Gan-Ochir Doojav

Keyword(s):

Exchange Rate ◽

Real Exchange Rate ◽

Trade Balance ◽

Developing Economies ◽

Jel Classification ◽

Vector Error Correction ◽

Vector Error ◽

Long Run ◽

Short Run ◽

Exchange Rate Depreciation

For resource-rich developing economies, the effect of real exchange rate depreciation on trade balance may differ from the standard findings depending on country specific characteristics. This article employs vector error correction model to examine the effect of real exchange rate on trade balance in Mongolia, a resource-rich developing country. Empirical results show that exchange rate depreciation improves trade balance in both short and long run. In particular, the well-known Marshall–Lerner condition holds in the long run; however, there is no evidence of the classic J-curve effects in the short run. The results suggest that the exchange rate flexibility may help to deal effectively with current account deficits and exchange rate risk. JEL Classification: C32, C51, F14, F32

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