Influence of Institutions on Inclusive Economic Growth in West Africa

Abstract

This study investigates the influence of institutions on inclusive economic growth in West Africa. The study employed a pooled mean group estimation technique and cross-sectional dependency, slope heterogeneity, panel unit root, and co-integration tests to analyze the data spanning from the period 1990 to 2022. The test of cross-sectional dependency and the slope heterogeneity reveals that the cross-sectional countries are independent and the slopes of the regression coefficients are heterogeneous across implying there is strong cross-sectional independency among the countries in West Africa due to globalization and trade liberalization. The penal unit root test result shows that economic growth and institutional variables at the initial difference remain stationary but trade openness is stationary at the level. Additionally, the co-integration finding shows that institutions and inclusive economic growth in West Africa are related over the long term. The study concludes that, although the impact varies between countries, institutions have a statistically significant long-term impact on inclusive economic growth in West African nations. Therefore, the study recommends that institutional variables in West Africa such as; the rule of law and control of corruption should be strengthened by governments of West African countries for continuous and inclusive economic growth as well as intensify their fights against violence or terrorism specifically in the region through their security agencies as these does not support growth inclusivity in the West African countries.