Trade Openness and Manufacturing Sector Performance in Some Selected West African Countries: A Panel Study Approach
Keywords:
Manufacturing Sector, Trade Openness, Panel Study, Nigeria, Fully Modified OLS and Dynamic OLS..Abstract
A good performance of the manufacturing sector is germane to the development of any economy. Hence, this study examined the relationships between trade openness and manufacturing sector output in 12 selected countries in West Africa. Specifically, it investigated whether trade growth, employment growth, investment growth, exchange rate growth and inflation rate impacted on manufacturing sector performance in the selected countries over the period from 1980 to 2019. Most of the earlier studies had been a time series analysis but this study differs in that the panel data series were analyzed using econometric techniques which included Dynamic Ordinary Least Square (DOLS) and Fully Modified Ordinary Least Square (FMOLS). This was to determine the magnitude of impacts of the explanatory variables on the manufacturing sector. The results of FMOLS and DOLS therefore, revealed that all the coefficients are positively associated and significant with manufacturing sector output except for trade openness that is not significant and inflation rate is negatively significant. This paper based on the findings of this study, therefore, recommends that the region needs to strengthen its involvement in trade liberalization and also sustain foreign policies that would attract more foreign direct investment (FDI) inflows.
References
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Onakoya, A. B., Fasanya, I. O., & Babalola, M. T. (2012). Trade openness and manufacturing sector growth: An empirical analysis for Nigeria. Mediterranean Journal of Social Sciences, 3(11), 637-637.
Osidipe, O. A., Onuchuku, O., Otto, G., & Nenbee, S. G (2012).. Trade Liberalisation and Selected Manufacturing Sectoral Groups in Nigeria. World Journal of Innovative Research, 5(6), 37-46.
Paus, E., Reinhardt, N., & Robinson, M. (2003). Trade liberalization and productivity growth in Latin American manufacturing, 1970-98. The Journal of Policy Reform, 6(1), 1-15.
Pegkas, P. (2015). The impact of FDI on economic growth in Eurozone countries. The Journal of Economic Asymmetries, 12(2), 124-132.
Posner, M. V. (1961). International trade and technical change. Oxford economic papers, 13(3), 323-341.
Romer, P.M. (1986). Increasing Returns and Long-Run Growth. Journal of Political Economy. 95(5), 1002-1037.
Sinha, T.& Sinha, D. (2000). No Virginia States in India are Not Converging. International Indian Association Working Paper 2000-09-01 (September)
Takam, F., Guy, M.K., Cyrille, B., & Litchepah, T.C. (2017). Does Trade Openness Affect Manufacturing Growth in EMCCA Countries? A Panel Cointegration Analysis. MPRA Paper 83747, University Library of Munich, Germany.
Tyopev, I. (2019). Trade openness and economic growth in selected West African countries (Doctoral dissertation).
Umoh, O. J., & Effiong, E. L. (2013). Trade openness and manufacturing sector performance in Nigeria. Margin: The Journal of Applied Economic Research, 7(2), 147-169.
UNIDO-UNTAD (2011) Economic Development in Africa Report.
Yi, W., & Li, Z. (2014). The Impact of Trade Liberalization on the Trade balance in Developing Countries. IMF Working Paper, Policy Development Review.
Adegboye, A.A. & Adeyinka, R.S. (2017). Public-Private Investment Nexus in Developing Economies: Does Financial Sector Development Matter for Nigeria? Munich Personal RePec Archive.
Adenikinju, A.F. (2005). Analysis of the Cost of Infrastructure Failures in a Developing Economy: The Case of the Electricity Sector in Nigeria. African Economic Research Consortium, 148.
Adenikinju, A.F. & Chete, L. (1995). Productivity, Market Structure and Trade Policy Reforms in Nigeria. A Research Report Presented at a Workshop by African Economic Research Consortium (AERC) June.
Adofu, I. (2009). Accelerating Economic Growth in Nigeria, The Role of Foreign Direct Investment, Journal of Economic Theory 2(1): 11-15.
Amirapu, A., & Subramanian, A. (2015). Manufacturing or services? An Indian illustration of a development dilemma. Center for Global Development Working Paper, (408).
Appleyard, D. R. & Field A. J. (1998). International Economics. Irwim McGraw-Hill, New York, USA (3rd ed).
Arvis, J. F., Duval, Y., Shepherd, B., & Utoktham, C. (2013). Trade costs in the developing world: 1995–2010. The World Bank.
Ashamu, S. O., & Abiola, J.O. (2014). Exploration of the Impact of International Trade on the Growth of Nigeria’s Manufacturing Sector: 1975-2010. Journal of Business Administration and Managemnet Sciences Research 3(1), 006-011. http://www.apexjournal.org.
Asongo, A.I., Jamala, G.Y., Joel, L., & Waindu, C. (2013). Impact of Trade Liberalization on the Performance of the Manufacturing Sector in Nigeria (1989-2006). Journal of Economics and Finance IOSR-JEF, 2(2), 17-22.
Chandrah, V.G.R. & Munusamy (2009). Trade Openness and Manufacturing Growth in Malaysia. Journal of Policy Modeling. 31, 637-647.
Clark, X., Dollar, D., & Micco, A. (2004). Port efficiency, maritime transport costs, and bilateral trade. Journal of development economics, 75(2), 417-450.
Daniels, J. & VanHoose D. (2013). Trade Openness, Capital Mobility, and the Sacrifice Ratio, Open Economics Review, 20(4).
Dasgupta, S., & Singh, A. (2007). Manufacturing, services and premature deindustrialization in developing countries: A Kaldorian analysis. In Advancing Development (pp. 435-454). Palgrave Macmillan, London.
Dodzin, S., & Vamvakidis, A. (2004). Trade and industrialization in developing economies. Journal of Development Economics, 75(1), 319-328.
Emerenini, F.M. &Ohadinma, C.M. (2018). The Impact of Trade Liberalization on Manufacturing Output in Nigeria 91980-2016). International Journal of Research in Social Sciences, 8(7), 87-107.
Gulati, A., Minot, N., Delgado, C., & Bora, S. (2007). Growth in high-value agriculture in Asia and the emergence of vertical links with farmers. Global supply chains, standards and the poor: How the globalization of food systems and standards affects rural development and poverty, 91-108.
Gwartney, J., Skipton, C., & Lawson, R. (2001). Trade openness, income levels, and economic growth, 1980–1998. Economic freedom of the world: 2001 annual report.
Hussain, M. E., & Haque, M. (2016). Foreign direct investment, trade, and economic growth: An empirical analysis of Bangladesh. Economies, 4(2), 7.
Im, K.S., Peasran, M., & Shin, Y. (2003). Testing for Unit Roots in Heterogeneous Panels. Journal of Econometrics, 115, 53-74.
Iyoha, M., & Oriakhi, L. (2002). Explained african economic growth performance: the case of Nigeria. African Economic Research Consortium. Nairobi.
Jhingan, M. L. (2006). International Economics. Vrinda Publication Ltd, Delhi, India
Khobai H., & Moyo, C. (2020). Trade Openness and Industry Performance in SADC Countries: Is the manufacturing Sector Different? International Economics and Economic Policy (2021) 18:105-126. https://doi.org/10.1007/s10368-020-00476-0.
Kim, J. Y. (2014). Remarks at African Growth and Opportunity Act. World Bank Group: Washington.
Levin, A., Lin,C. & Chu, J. (2002). Unit Root Test in Panel data: Asymptotic and Finite Sample Properties. Journal of Economterics in Elsevier, 108, 1-24.
Ogu, C., Aniebo, C., & Elekwa, P. (2016). Does Trade liberalisation hurt Nigeria’s manufacturing sector. International Journal of Economics and Finance, 8(6), 175-180.
Okon, J. & Ekpeno, L.E. (2013). Trade Openness and Manufacturing Sector Performance in Nigeria. The Journal of Applied Economic Research, 72, 147-169.
Onakoya, A. B., Fasanya, I. O., & Babalola, M. T. (2012). Trade openness and manufacturing sector growth: An empirical analysis for Nigeria. Mediterranean Journal of Social Sciences, 3(11), 637-637.
Osidipe, O. A., Onuchuku, O., Otto, G., & Nenbee, S. G (2012).. Trade Liberalisation and Selected Manufacturing Sectoral Groups in Nigeria. World Journal of Innovative Research, 5(6), 37-46.
Paus, E., Reinhardt, N., & Robinson, M. (2003). Trade liberalization and productivity growth in Latin American manufacturing, 1970-98. The Journal of Policy Reform, 6(1), 1-15.
Pegkas, P. (2015). The impact of FDI on economic growth in Eurozone countries. The Journal of Economic Asymmetries, 12(2), 124-132.
Posner, M. V. (1961). International trade and technical change. Oxford economic papers, 13(3), 323-341.
Romer, P.M. (1986). Increasing Returns and Long-Run Growth. Journal of Political Economy. 95(5), 1002-1037.
Sinha, T.& Sinha, D. (2000). No Virginia States in India are Not Converging. International Indian Association Working Paper 2000-09-01 (September)
Takam, F., Guy, M.K., Cyrille, B., & Litchepah, T.C. (2017). Does Trade Openness Affect Manufacturing Growth in EMCCA Countries? A Panel Cointegration Analysis. MPRA Paper 83747, University Library of Munich, Germany.
Tyopev, I. (2019). Trade openness and economic growth in selected West African countries (Doctoral dissertation).
Umoh, O. J., & Effiong, E. L. (2013). Trade openness and manufacturing sector performance in Nigeria. Margin: The Journal of Applied Economic Research, 7(2), 147-169.
UNIDO-UNTAD (2011) Economic Development in Africa Report.
Yi, W., & Li, Z. (2014). The Impact of Trade Liberalization on the Trade balance in Developing Countries. IMF Working Paper, Policy Development Review.
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Published
2021-06-24
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Sade, A. T., Esther, A. B., Oladipo, A. D., & Adedokun, D. (2021). Trade Openness and Manufacturing Sector Performance in Some Selected West African Countries: A Panel Study Approach: Array. Acta Universitatis Danubius. Œconomica, 17(3). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/1040
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Economic Development, Technological Change, and Growth
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