Export-Led Growth Hypothesis in ECOWAS: A Panel Data Analysis
The export led-growth hypothesis is one of the widely researched areas in the field of international economics. However, there is an ongoing debate as to whether it is export that causes economic growth or vice versa; with past and current research showing mixed findings. This paper retested the export-led growth hypothesis using panel data for ten selected ECOWAS member countries from 2000 to 2017. We used panel autoregressive distributed lags/pooled mean group (ARDL/PMG) approach as well as the panel causality test to determine the directional relationships of the macroeconomic variables used. We further disaggregated export into three (merchandise export, services export and total export) and controlled for other growth-relevant variables. From the panel ARDL/PMG estimation, we found that merchandise export positively influences economic growth in both the short and long runs; while services export and total export positively impact economic growth only in the long run. Using the pairwise granger causality test, we found a long run causal relationship flowing from services and total exports to economic growth respectively. However, we also found a bidirectional relationship between merchandise export and economic growth. Given the findings, this study found support for the export-led growth hypothesis in ECOWAS. Policy wise, efforts to improve the region’s economy should be channeled through export promotion strategies.