Examining the Trade-Growth Nexus in the Economic Community of West African States

This study explores the nature of the trade-growth nexus in order to determine the role of outward-oriented trade policies in raising economic performance in eleven member nations of the West African Economic Community, hereafter referred to as Ecowas. Although existing studies in the literature have provided some important insights to the trade-growth relationship, a number of concerns about the conceptual and methodological approaches remain. The paper employs recent advances in co-integration techniques and country-specific time series data to examine both short-run dynamics and the long-run equilibrium relationship between trade and economic growth for eleven of the fifteen member states of Ecowas2 for which complete and reliable data were available. It is worth noting that in 2003, African central bankers announced a plan for a single currency and common central bank for the entire continent, and regard regional economic unions including the Ecowas as an intermediate step toward a single African central bank and currency. A plan with such potential widespread economic and political consequences deserves a careful examination based on good research intelligence and analyses of the underlying growth dynamics and processes in each of the member countries in order to harness them for economic growth and development of the region. However, to date and to the present author's knowledge, very little research has been done on these aspects of the plan toward a single economic and currency union of Africa.