Can national productions replace imports in West African countries? Estimation of the Marshall–Lerner–Robinson condition (MLRC)

Laurent Oloukoi

African Journal of Economic and Management Studies, 2023, vol. 14, issue 4, 757-775

Abstract: Purpose - This article examines if the national productions of West African Economic and Monetary Union (WAEMU) countries can be substituted for the imports by testing MLRC in these countries. Design/methodology/approach - The Mundell–Fleming model (MMF) is the analytical framework adopted in this paper with import demand and export supply functions estimation borrowed to Thirlwall (1979). This study covers four countries in West Africa from 1990 to 2021. The estimation procedure used is an Autoregressive Distributed Lag (ARDL) approach to cointegration. Findings - The findings reveal that there is a strong marginal propensity to import in the WAEMU countries. The hypothesis of a non-significant price effect on imports in the short-term is confirmed for several countries while only Togo satisfies the MLRC in the short and long run. Originality/value - This study presents several originalities: (1) it evaluates MLRC with a clear analytical framework; (2) unlike other studies, this article quantifies the MLRC from a theoretical, econometric and empirical point of view; (3) this article presents the results country by country in order to reveal heterogeneity between countries; (4) this study adds to the Marshall–Lerner condition for the derivation of Robinson by considering a situation where initially the trade balance is not in equilibrium.

Keywords: Elasticity; Real exchange rate; Trade balance; WAEMU; C32; E12; F31 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ajemsp:ajems-05-2022-0205

DOI: 10.1108/AJEMS-05-2022-0205

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