Trade Integration, Growth and Employment in West Africa: Implications for African Continental Free Trade Area (Afcfta)

Abstract

Abstract This study investigated the effects of trade integration on economic growth and employment in West Africa from 2005 to 2019. Using a two-step panel GMM estimation technique, results showed that trade between West Africa member states and other SSA countries has more reinforcing growth propelling effect. That is, trade deepening between West African countries and other SSA countries has the tendency to boost growth more than when trade is just among the West African countries. Results also showed that although trade integration has not led to expansion in employment in the West African region, increased volume of trade among countries would foster more employment generation. The policy import of the study is threefold. First, when West Africa countries trade among themselves, the benefits of trade in enhancing economic growth and employment generation is small. Second, with trade between West Africa and other countries and regions in SSA, West Africa stands better chance of harnessing more growth and employment benefits from trade integration. Third, there is therefore the need for West Africa to key into the AfCFTA implementation as deeper trade within Africa has great potentials of fast-tracking growth and more employment generation for the region.