Title:
REGIONAL ECONOMIC INTEGRATION AND ECONOMIC GROWTH IN THE WEST AFRICAN MONETARY ZONE (WAMZ) COUNTRIES

Authors:
Omolehinwa, Linda Udo Chineye; Alwell Nteegah & Sylva Ezema Kalu, Nigeria

Abstract:

The considerable degree of heterogeneity and economic diversifications among the countries of West African Monetary Zone (WAMZ) have led to the vulnerability of economic integration in the region. This study investigated the extent to which economic integration affected regional economic growth of the member states of WAMZ. Economic integration indexes are divided into trade and financial integration and trade integration index was further divided into export concentration and import concentration indexes. Economic growth which is the dependent variable is proxy by the growth rate of real GDP. The other variable in the model is quality of public institutions in the countries. The five variables are collected from various sources (the Penn world tables, World Bank’s Governance indicators, the IMF database online and the World Bank’s World Development Indicators (WDI)). The panel unit root test and cointegration test were used to test for the stationary behavior and possibility of long-term relationship among the variables. The reported models (static and dynamics) were estimated with Least Square Dummy Variables estimator and the Generalised Method of Moment estimator. The results show that there are no long-run relationships between regional economic integration and economic growth in WAMZ countries; the underlying relationships between regional economic integration and economic growth in the WAMZ can only be treated in short-term policy frameworks. It was equally found out that the countries of the WAMZ region tend to follow the demand-leading hypothesis since imports are more concentrated than exports and that the relationships among the six countries are heterogeneous, making it difficult for regional economic integration to facilitate economic growth in the region in the long-term. Based on these findings, the study recommends that: there should be an increase and strengthening of financial integration among WAMZ countries; the productive areas of member countries of WAMZ should be diversified in order to improve trade and corruption should be eradicated as a possible measure of making economic integration beneficial to member countries of WAMZ.