Challenges in Trade openness, Governance and Industrial Productivity in West African Economic and Monetary Union (WAEMU) Countries

Abstract

Inward-looking development strategies can lead to marginalization and slow growth especially for the small African domestic markets. However, when weak economies try to participate in the global economy studies in Southeast Asia show they end with significant challenges. Therefore, this paper analyzed the effects of trade openness on industrial development in West African Economic and Monetary Union (WAEMU) countries. However, due to data availability, the study covered seven countries over the 1996 – 2018 period. The pooled-mean group method was used in the analysis. The results of the analysis showed that, in the long run, trade openness did not benefit the development of the industrial sector in all the countries studied. However, in the short run, the results revealed the specificities of each country. These short-run results showed that trade openness has a positive and significant effect on the industry added values observed in countries such as Burkina Faso, Niger and Togo. The results also showed that government inefficiency has a negative impact on the development of the industrial sector in the long -run for all the countries studied. Furthermore, the indicator capturing the degree of freedom of corruption had a positive impact on the development of the industrial sector in the short or long run. Therefore, active engagement with the forces of globalization need strategic approaches in their integration in developing countries.