Impact of Intra and Extra-Regional Trade on Economic Growth: Evidence from ECOWAS

This paper assessed the impact of intra- and extra-regional trade on economic growth of ECOWAS countries, using cross-country time series regressions (panel analysis). Using standard growth model with import and export trade values of the selected countries as our major variables. Our estimate of the Hausman test, show a probgreater than0.6028, which supports the random effect estimate. Accordingly, the result show that intra-regional trade is positively and significantly related to the dependent variable, gross domestic product per capita. Thus, an 8 per cent increase in intra-regional trade will bring about 1 per cent rise in gross domestic product per capita, a proxy for the standard of living of the people. Furthermore, extra-regional trade is increasing rapidly at a disproportionate rate to intra-regional trade compared to other regions like SADC, suggesting that there is great potential for economic growth in the region if part of extra-regional trade is converted to intra-regional trade. Export growth in West Africa is dominated by commodities as a result of greater focus placed on extra-regional trade than on intra-regional trade. Therefore, there have been limited implications for employment and poverty levels in the region.