FOREIGN TRADE AND ECONOMIC GROWTH IN THE WEST AFRICAN SUB-REGION

Abstract

The influence of foreign trade on economic growth across countries has been a topic of scholarly debate. Growth seems in general to be good in reducing poverty and maintaining income distribution. However, empirical generalization is not universal law as example can be found where income of the poorest fifth did not keep up with growth in average income. A number of researches have shown that growth is enhanced by foreign trade, or openness, or trade liberalization (Dollar 1992; Sachs and Warner 1995; Edwards 1998). Frankel and Romer (1999) find a significant impact of foreign trade on levels of per capita income. In the study we look at the influence of foreign trade on economic growth using 15 countries in the West African sub region. The secondary method of sourcing data was used and data were source from journals, World Bank Indicator. The cross section (correlated random effect-Haussmann test) method was used to analyzed the data from 2008 to 2020. The estimate shows that there exist an inverse relationship between economic growth and import but not statistically significant and also economic growth (GDP), export, foreign direct investment and external debt are positively related and statistically significant. It is therefore, recommended that Imports should be reduced by encouraging more production of the imported commodities thus enhancing availability of foreign exchange for other productive venture thereby improving the exportation of more competitive manufactured commodities from the sub region.