Economic Growth in ECOWAS: Linear and Nonlinear Dynamics of Domestic Investment, Trade Openness, Inflation, and Infrastructure Access

Evans Yeboah

African Development Review, 2025, vol. 37, issue 4

Abstract: This study investigates the effects of domestic investment, trade openness, inflation, and electricity access on economic growth in nine ECOWAS countries from 2000 to 2023. Pooled mean group autoregressive distributed lag (PMG‐ARDL) and nonlinear pooled mean group autoregressive distributed lag (PMG‐NARDL) models are applied to capture long‐run relationships and asymmetric adjustments. Results show that domestic investment supports income growth, but its effect weakens when combined with electricity access, reflecting infrastructure inefficiencies. Trade openness produces mixed outcomes: linear estimates indicate a negative long‐run link, while nonlinear results reveal that increases in openness stimulate growth, whereas contractions reduce income. Inflation also behaves asymmetrically, as disinflation enhances growth while rising inflation exerts weaker adverse effects. The trade–inflation interaction suggests that inflation may ease some negative impacts of trade exposure. Foreign direct investment displays asymmetry as well, with declines associated with stronger growth, possibly due to greater domestic resource mobilization. Unemployment and population growth produce inconsistent effects across models. By applying linear and nonlinear panel ARDL methods, this study evaluates macroeconomic and structural drivers of growth in West Africa. The findings point to reforms in electricity infrastructure, balanced trade liberalization, and inflation stabilization to sustain growth in ECOWAS economies.

Date: 2025
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