CAPITAL INFLOWS, FINANCIAL DEVELOPMENT AND GROWTH IN ECOWAS COUNTRIES: A NEW EMPIRICAL INSIGHT

Anthony Orji, OGBUABOR Jonathan E., F. Okolomike Chiamaka and Onyinye Anthony-Orji
Authors registered in the RePEc Author Service: Anthony Orji

Applied Econometrics and International Development, 2022, vol. 22, issue 1, 61-80

Abstract: This paper empirically investigated the impact of foreign capital inflows and financial development on economic growth in ECOWAS countries. The study made use of quarterly data series from 2000 to 2017 for the analysis. Adopting the panel fixed-effect regression, the empirical results showed that Foreign Direct Investment (FDI), net domestic credit (CRE), Gross Capital Formation (GCF), and Foreign Aid (AID) increase economic growth in ECOWAS region while labour force (LF) and Trade Openness (OPEN) revealed otherwise. The study therefore recommended that concerned policy makers in the ECOWAS region should pursue financial deepening and strengthen policies that will enhance the operations of the financial system. Also member countries should create a conducive socio-political and economic environment for foreign investors to invest in the economies. This can be done by reducing the corruption prevalent in the system, ethnic unrest, introduction of tax holidays, stability of policies introduced by the government, among others. In this era of Covid-19 many have lost their jobs and the economy of ECOWAS needs to be revitalized by following these economic prescriptions, among others.

Keywords: Foreign Capital Inflows; Financial Development, Investment; Economic Growth; ECOWAS (search for similar items in EconPapers)
JEL-codes: F21 F36 F38 F43 G15 O16 (search for similar items in EconPapers)
Date: 2022
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