Abstract
In this paper, we evaluate the determinants of effectiveness of the Economic Community of West African States (ECOWAS) at promoting regional trade in West Africa between 1995 and 2010. We employ the modified gravity model (GM) that allows for the inclusion of country specific and country-pair characteristics in addition to the traditional GM variables (income and distance). Our findings reveal that economic size, distance, geographical factors such as common border, landmass, landlockedness of countries and socioeconomic variables like common language, political stability and availability of infrastructure significantly influence intra-regional trade within the ECOWAS region. We also find that the francophones dominated region (WAEMU) is exports trade creating while the anglophones dominated region (WAMZ) is trade diverting. Therefore, for ECOWAS to be successful in terms of facilitating intra-regional trade, current efforts at forming a synergy between WAEMU and ECOWAS should take cognizance of promoting trade between members, irrespective of colonial origin.
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Notes
- 1.
Unlike Africa, the contribution of other regions like Asia has been on the increase during the same period. This is partly due to the increasing competitiveness of the region and its transition to production of value added goods via improved technology.
- 2.
Bundu Abass is a former Executive Secretary of ECOWAS.
- 3.
This section on intra-regional trade excludes four countries namely Liberia, Guinea Bissau, Sierra Leone and Cape Verde because of lack of sufficient data.
- 4.
It is important to note that the total value of intra-ECOWAS trade (both exports and imports) used here excludes those of Guinea Bissau, Liberia, Sierra Leone and Cape Verde because of lack of sufficient data. However, the results obtained are not expected to differ significantly from those in this section since this countries exert little influence on the total (precisely less than 10Â % of the total).
- 5.
For the sake of intellectual transparency, it is salient to note that this section gains extensively from the brilliant work done by Kepaptsoglou et al. 2010 especially in getting access to literatures and opinions that were hitherto beyond the reach of the author.
- 6.
The authors deliberately selected the reviewed studies bearing in mind the fact that they adopted different methodologies. So we attempt to compare results when different methods were used.
- 7.
The language dummy in Eq. 4 has been dropped in subsequent estimations involving RTAs to prevent a case of multicollinearity.
- 8.
Variables adopted find their basis in some of the literatures reviewed in the third section above.
- 9.
Other countries in the ECOWAS region (i.e. Sierra Leone, Liberia, Guinea Bissau and Cape Verde) were excluded because of lack of sufficient data as most of them faced problems of social unrest for a long period. However, we are confident that their exclusion will not significantly affect the estimation results as these countries have relatively small contributions to the region.
- 10.
- 11.
Find data at: http://www.cepii.fr/anglaisgraph/bdd/distances.htm
- 12.
This position is formed based on the level of FDI inflow into these countries from rational investors over the years of which Nigeria and Ghana account for about 54Â % and 22Â % respectively of total FDI into the countries in 2010.
- 13.
The results of the variants of the RTA model that span 1995 to 2004, 2005 to 2010 and the pooled for 1995 to 2010 were found to be very similar in magnitude and signs. Although WAMZ was formed in the year 2000, since the result of the variant for 2005 to 2010 does not differ from other periods, it is safe to draw the afore-stated conclusions. Moreover, WAMZ and WAEMU are used here to check the effect of the dichotomy between Francophone and Anglophone West African countries.
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Olofin, S., Salisu, A., Ademuyiwa, I., Owuru, J. (2014). Determinants of a Successful Regional Trade Agreement in West Africa. In: Seck, D. (eds) Regional Economic Integration in West Africa. Advances in African Economic, Social and Political Development. Springer, Cham. https://doi.org/10.1007/978-3-319-01282-7_8
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