Regional Integration and Economic Growth Evidence from ECOWAS

Abstract

Since its inception, the performance of the ECOWAS regional integration in terms of economic growth has not been encouraging. Numerous reforms were implemented to enhance the level of integration in the region including the revision of the ECOWAS of 1993. This study aims to examine the effect of the regional integration on economic growth, and, particularly, the effect of the revised treaty of 1993 on economic growth in the ECOWAS. We estimate a standard growth model using a panel dataset on 14 ECOWAS countries over 44 years (1975-2019) by a fixed effects regression with the Driscoll-Kraay Standard Errors method. This technique provides consistent and robust estimators, overcomes heteroscedasticity, autocorrelation, and cross-sectional dependence that might generate bias on statistical results. The study found that regional integration exhibits a positive relationship with economic growth in the ECOWAS. Hence, ECOWAS economic growth is stimulated by regional integration through openness to international trade and physical capital stock accumulation while FDI and human capital accumulation were found to be not statistically significant at level. Besides, the effect of the ECOWAS revised treaty of 1993 on economic growth was positive. This reform was been associated with an increase in the ECOWAS GDP growth rate by 1.627 percent. The findings, the study recommends the implementation of policies toward a more open economy into international trade, the establishment of the business environment to attract FDI and promotes domestic investment, and lastly, the implementation of reforms to deepen regional integration.