Impacts of Selected Economic Factors on Economic Growth in West African Countries: Panel ARDL Analysis

Abstract

This study used three estimators Pooled Mean Group (PMG), Mean Group (MG) and Dynamic Fixed Effect (DFE) within a panel autoregressive distributed lag (ARDL) model to evaluate both short-run and long- run effects of selected key economic indicators on economic development in West African context. The impact of Trade openness, Foreign direct inflation rate and industrialization on Real gross domestic product per capita as a stand-in for fiscal performance in West African countries between the phase of 1990 to 2022 was investigated with the Panel ARDL modelling approach. The study finds evidence of a cointegrating association between the economic growth in West Africa and the selected variables. It is further observed that trade openness and inflation are found to have a positive significant impact on RGDP in the long run. All the estimated panel ARDL regressions highlight that economic development in West African countries depends significantly on foreign direct investment and the rate of inflation. This study recommends policymakers in the region implement anti-inflationary measures alongside developing robust infrastructure and a conducive environment to attract foreign investors, thereby fostering stable and sustainable economic growth in West African countries.