Abstract
Purpose – This paper examines the impact of regional and non-regional trade on economic growth using annual data from Economic Community of West African States (ECOWAS) member countries for the period 2007 to 2017. Design/methodology/approach – Trade data were decomposed into regional (trade among ECOWAS Member States) and non-regional (trade between ECOWAS Member States and the rest of the world). We used the dynamic system GMM to estimate the models and introduced exchange rate, unemployment rate, population growth and gross capital formation as controlled variables. Findings – The results revealed that the estimated coefficient of ECOWAS regional trade is statistically significant and positive in predicting growth, while the non-regional trade coefficient is negative and not statistically significant in predicting growth. Other predictors of growth introduced into the model as controlled variables, such as exchange rate, unemployment rate, population growth and gross capital formation, displayed mixed results. More importantly, population growth, unemployment and exchange rate depreciation hurt economic growth, while gross capital formation promotes economic growth. Practical implications – The findings provide strong support in favour of the Krugman (1991) hypothesis that regional trade agreements (RTAs) are a better alternative to global trade. Originality/value – Our decision to disaggregate ECOWAS trade is unique and influenced largely by the objective of the study, which is to establish the type of ECOWAS trade that is a good predictor of growth. The evidence from our findings support the theory that RTAs are a better catalyst to economic growth.
Keywords
Regional and non-regional trade, Economic growth, ECOWAS, Dynamic panel GMM
Publisher
Kinh Tế Quốc Dân???dc.relation.reference???
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Afangideh, U.J., Ujunwa, A. and Ukemenam, A.I. (2018), “ Oil prices, armed conflict and government revenue in Nigeria” , International Journal of Emerging Markets, Vol. 13 No. 5, pp. 1196-1210. Almeida, R. and Fernandes, A.M. (2008), “Openness and technological innovations in developing countries: evidence from firm-level surveys”, The Journal of Development Studies, Vol. 44 No. 5, pp. 701-727. Arellano, M. and Bond, S. (1991), “Some tests of specification in panel data: Monte Carlo evidence and an application to employment equations”, Review of Economics and Statistics,...See More
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