Export-Led Growth Hypothesis and Economic Growth in West Africa: Evidence from Fully Modified Ols and Dynamic Ols
Author(s)
Murtala Usman Tukur , Oyefabi Ilemobola Solomon , Umar Yuguda Amuwa , Alfa Yakubu ,
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Abstract
This study uses the fully modify ordinary least square (FMOLS) and the dynamic ordinary least square (DOLS) to examineexport-led growth hypothesis in West African countries over the period 1980 to 2018. To achieve the objective of the study, panel data on Real Gross domestic product (RGDP), Exchange rate (REXR), net exports (NXPT, labor (LABR)and investment (INVS)) were collected for seventeen West African countries from database of the international financial statistics (IFS) and World Development Index (WDI). The data were analyzed using dynamic ordinary least square (DOLS) and fully modify ordinary least square (FMOLS). Findings from the study show that exports had significant impact on economic growth of the West African countries investigated in this study. Based on the findings, it is recommended, among other things, that the governments of West African countries should continue with export-led economic growth since there is strong empirical evidence in support of the export-led development agenda. More importantly West African countries need to diversify her export base if the export-led growth agenda is to be sustained. Furthermore, positive impact of investment on RGDP suggests that the government of West Africa need to invest in technologies that can help in processing its primary export commodities in order to boost its export quality and the revenues. Alternatively, this can be done in partnership with foreign investors. Another policy option government should consider is maintaining a lower domestic currency value relative to foreign currencies. This promotes exports because the undervalued domestic currency makes it cheaper for foreigners to buy exports form African countries while making it expensive for African countries to purchase foreign goods.
Keywords
export led growth hypothesis, FMOLS, DOLS
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