Dynamic Long-Run of Trade Openness on Economic Growth Among Selected West African Countries: A Panel Data Approach

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Haruna_Mairafi_Dahiru_2019.pdf (685.88 KB)

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2019-10-14

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Department of Banking & Finance, Nasarawa State University, Keffi

Abstract

The study aims to examine the dynamic long-run effect of trade openness in stimulating economic growth among selected West African Countries (WACs) namely: Nigeria, Ghana, Niger, and the Benin Republic for the period 1986 - 2016. The unit root test establishes mix integration I(0) and I(1). The Cointegration test base on Pedroni confirm the variables are cointegrated. Pooled Mean Group (PMG) employs after a Hausman test of model selection. The finding reveals that trade openness and foreign direct investment influence growth among the selected economies and statistically significant. Besides, openness to trade and FDI found to be long-run driver to growth and the need for government to reform their institutions to liberalize the foreign sector so that all barriers to trade are address and to attract investors as well as to improve trade partnership with the rest of the world and the benefits from the positive spillover of both FDI and trade openness into WACs. The inflation rate does not stimulate economic growth in WACs due to the instability in the macroeconomic environment. Whereas the exchange rate was found to be negative and statistically significant, this indicates a negative relationship to GDP.

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Trade Openness, Economic Growth, West African Countries, PMG model

Citation

Ahmed, A.D. & Suardi, S. (2009). Macroeconomic volatility, trade and financial liberalisa tion in Africa. World Development, 37(10), 1623-1636. Ahmet, A.Y., Fahri, K. and Mahamane, M. A. B., (2017). Relationship between trade openness, capital formation and economic growth: a panel data analysis for African countries. International Conference on Eurasian Economies 2017 Session 2a: Growth & Development, 2-16. Amirkhalkhali, S., & Dar, A. (2019). Trade openness, factor productivity, and economic growth: recent evidence from OECD countries (2000-2015). Applied Econometrics and International Development, 19(1), 5-14. Antoine C, El Khoury, Andreas Savvides (2006). Openness in services trade and economic growth. Economics Letters, 92, 277-283. Arabiyat, T. S., Mdanat, M., & Samawi, G. (2020). Trade Openness, Inclusive Growth, And Inequality: Evidence from Jordan. The Journal of Developing Areas, 54(1). Bhagwati, J. N., (1978). Foreign trade regimes and economic development: anatomy and consequences of exchange control regime. Cambridge, MA: Ballinger.

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https://keffi.nsuk.edu.ng/handle/20.500.14448/932

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