Towards Export-Led Growth in the West Africa Sub Region Economies
DOI:
https://doi.org/10.14738/abr.910.10769Keywords:
Export-led growth; Import substitution, Import surge, causality, West Africa.Abstract
The policy of import substitution dominated developing economies especially Sub-Sharan African countries up till 1970. The focus later shifted to pursuing growth through increased export. Recently, countries of the West Africa Sub-region are clamoring for a revisit of growth through import substitution policies. This study therefore delved into the question of whether ECOWAS countries should go for import substitution growth strategy, or to develop strategy that promotes export-led growth, following the law of comparative advantage or a considerable mix of the two strategies. Using an export-augmented neoclassical production function, the study tested how relevant is the Export-led Growth Hypothesis for the ECOWAS sub-region over the period 1980-2014.
Evidence does not offer a strong support for the Hypothesis in the short run but a strong evidence for improved capital stock and labor causing growth. However, long-run results suggest a significant relationship between export and growth but currently negative. A likely explanation of this negativity is that although exports, in the West African sub-regions has the tendency of increasing growth in the long run along with other factors of production, the present conditions of export, especially manufactured and agricultural exports, is experiencing a kind of “Import surge”. That is the import content of exports is high and the local content is low, thus reducing the spillover or multiplier effects. This was confirmed by the strong bilateral causality between export and import discovered in this study. A policy mix of import substitution and export promotion strategies was recommended for countries in this sub-region. Policies that will promote technological innovation in manufacturing and linkages with local suppliers alongside incentives to produce towards export are imperative. Production towards export should be focused on manufactured and agricultural products where each country has the highest comparative advantage so as to reduce the import content of the export.
References
Ancharaz, Vinaye. (2011). Trade, Jobs and Growth in Africa: An Empirical Investigation of the Export-led Jobless Growth Hypothesis.
Bahmani-Oskooee, M., and J. Alse. (1993). Export Growth and Economic Growth: An Application of Cointegration and Error-correction Modeling. Journal of Developing Areas 27, pp 535-542.
Barro, R. J., and X. Sala-i-Martin. (1995). Economic Growth. New York: McGraw-Hill.
Buffie, E.F. (1992). On the Condition for Export-led Growth. Canadian Journal of Economics, 25(1), pp 211-25.
Chang, T.; W. Fang; W. Liu; and H. Thompson. (2000). Exports, Imports and Income in Taiwan: An Examination of the Export-led Growth Hypothesis, International Economic Journal 14(2), pp 151-60.
Dollar, D., & Kraay, A. 2004. Trade, Growth, and Poverty. The Economic Journal 114(493): F22–F49.
Edwards, S. (1992). ―Trade Orientation, Distortions and Growth in Developing Countries, Journal of Development Economics 39(1), 31-57.
Feder, G. (1983). On Exports and Economic Growth. Journal of Development Economics 12(2), pp 59-73.
Feyrer, J. 2009. Trade and Income—Exploiting Time Series in Geography. Working Paper 14910. National Bureau of Economic Research.
Fosu, A. K. 2013c. Impact of the Global Financial and Economic Crisis on Development: Whither Africa? Journal of International Development 25(8): 1085-1104.
Fosu, A. K. 1990a. Export Composition and the Impact of Exports on Economic Growth of Developing Economies. Economics Letters 34: 67– 71.
Grossman, G.M and Helpman, E (1991). Innovation and Growth in the Global Economy, The MIT Press, Cambridge.
Heller, P.S., and R.C. Porter. (1978). Exports and Growth: An Empirical Re-investigation, Journal of Development Economics 5 (2), pp 191-193.
Herzer, D., Nowak-Lehmann, F. and Silverstovs, B. (2006) Export-led Growth in Chile: Assessing the Role of Export Composition in Productivity Growth. The Developing Economies 44 (3), pp 306-28.
Irwin, D. and M. Terviö. 2002. Does Trade Raise Income? Evidence From the Twentieth Century. Journal of International Economics 58: 1-18.
Islam, M.N. (1998). Export Expansion and Economic Growth: Testing for Cointegration and Causality, Applied Economics 30 (3), pp 415-25.
Jaffee, D. (1985). Export Dependence and Economic Growth: A Reformulation and Re-specification, Social Forces 64 (1), pp 102-18.
Jung, W.S., and P.J. Marshall. (1985). Exports, Growth and Causality in Developing Countries, Journal of Development Economics 18(1), pp 1-12.
Krueger, A.O. (1978(. Foreign Trade Regimes and Economic Development: Liberalization Attempts and Consequences. Cambridge, Mass: Ballinger.
Lucas, R. (1988). On the Mechanics of Economic Development, Journal of Monetary Economics 22(1), pp 3-42.
Lussier, M. 1993. Impacts of Imports on Economic Performance: A Comparative Study. Journal of African Economies, 2(1): 106 – 27.
Moon, B.E. (1998). Exports, Outward-oriented Development, and Economic Growth, Political Research Quarterly 51(1), pp 7-36.
Noguer, M., Siscart, M. 2005. Trade Raises Income: A Precise and Robust Result. Journal of International Economics 65(2): 447 – 460.
Ogunleye E. O. and Ayeni, R. K. (2008). The Link between Export and Total Factor Productivity: Evidence from Nigeria, International Research Journal of Finance and Economics, 1450-2887 (22), http//www.eurojounals.com/finance, pp, 83-91
Okoh, R.N. (2005): ‘Global Integration and the Growth of Nigeria’s Non-oil Exports’. Available on internet http//www.csae.ox.ac.uk/conferences/2004.
Romer, P. (1986). Increasing Returns and Long Run Growth, Journal of Political Economy 94(5), pp 1002-37.
Romer, P. (1989). What Determines the Rate of Growth and Technological Change? World Bank Working Paper no. 279.
Sy, Amadou (ed.) (2017). Foresight Africa: Top Priorities for the Continent in 2017., Washington, D.C.: Brookings Institution.
Tyler, M. (1981). Growth and Export Expansion in Developing Countries: Some Empirical Evidence, Journal of Development Economics 9(1), pp 121-30.
Yanikkaya, Halit. (2003). Trade Openness and Economic Growth:A Cross-country Empirical Investigation. Journal of Development Economics 72 (1) 57–89.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2021 R. K. Ayeni, Momodou Mustapha FANNEH
This work is licensed under a Creative Commons Attribution 4.0 International License.
