The impact of free trade and institutional quality on Economic Community of West African States trade
Regional and Economic integration has become an essential issue for Economic Community of West African States (ECOWAS). Despite the abundant research done on regional trade and its determinants, little has been done to examine the impact of free trade and institutional quality, particularly for ECOW...
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| Format: | Thesis |
| Language: | eng eng |
| Published: |
2017
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| Subjects: | |
| Online Access: | https://etd.uum.edu.my/7202/1/s95503_01.pdf https://etd.uum.edu.my/7202/2/s95503_02.pdf |
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| Summary: | Regional and Economic integration has become an essential issue for Economic Community of West African States (ECOWAS). Despite the abundant research done on regional trade and its determinants, little has been done to examine the impact of free trade and institutional quality, particularly for ECOWAS, one of the most corrupt, less governed and politically unstable regions on the globe. The main objective of this research is to critically examine the impact of free trade and institutional quality on ECOWAS from 1985 to 2013 using gravity model of trade. Panel Unit Root were employed in order to test for stationarity of the series, Panel Cointegration was employed to test for long run relationship, Poisson Pseudo Maximum Likelihood Fixed Effect (PPML), and Dynamic Instrumental Generalized Method of Moments System and First Differenced (DGMM) were also employed to test further for long run relationship. The results indicate that ECOWAS is a regional force. High political
instability and feeble governance have hindered ECOWAS trade performance over the years. Although trade openness and the old colonial and historical ties of ECOWAS have spurred regional trade inflows, financial openness has had a negative and significant impact on ECOWAS regional trade. The study suggests that ECOWAS must address the feeble institutional quality within the region; also, they need to proceed
further to the next stage of integration in order to enhance trade, economic growth and
development. The results highlight the fundamental significance of properly accounting
for endogeneity and heterogeneity bias when trade policy effects are being evaluated. |
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