Total Factor Productivity Growth: Evidence from West African Economies

Abstract

Since the 1990s, the economic growth of the West African region has been remarkable, with average GDP growth of 5 per cent annually. In view of that, this article investigates the Total Factor Productivity (TFP) performance for the Economic Community of West African States (ECOWAS) region, which takes into account the recent development on political stability and trade openness. There were also periods when TFP fell sharply, the most significant happened in the late 1990s and 2000s where TFP dropped significantly which might be attributed to the spillover effect of the Asian and global financial crises. Our results showed that TFP was performing well for the region as well as for each member countries for the period of the study. We acknowledged that the estimated TFP in our model captures other factors such as human capital, health and other institutional factors that could affect economic growth. We also estimated the Technical Efficiency (TE) for the ECOWAS region using the Stochastic Frontier Modelling and the result indicates that the TE performance is well below the optimal level of production.