FREE TRADE DYNAMICS AND EXPORT-IMPORT COMPETITIVENESS IN ENGLISH SPEAKING WEST AFRICAN COUNTRIES (ESWACS)

Abstract

The dwindling performance of African countries on the global competitiveness scale has remained an issue of concern; even when the countries take part in international trade. This concern is heightened by the recent 2019 global competitiveness index report where none of the African countries is in the top 100 countries. Bothered by this, the study aims at examining free trade dynamics and export-import competitiveness in ESWACs (Nigeria, Ghana, Gambia, Liberia and Sierra Leone). Specifically, its aim is to determine the impact of trade openness (TROP), terms of trade (TETR) and free trade benefits (FTRB) on export-import competitiveness (XMCO). Theoretically, the study relies on Ricardo-Heckscher-Ohlin, Global Strategic Rivalry and Porter’s National Competitive Advantage theoretical framework and makes use of balanced panel data sourced on the variables from the five countries. Descriptive statistics, correlation, Im, Pesaran and Shin (2003) unit root, Panel-ARDL Bounds cointegration and Error Correction Mechanism, Fixed, Random and Hausman, Wald Unrestricted Coefficient tests, residual diagnostic and impulse tests are the analytical techniques used. The key finding is that TETR significantly impacts on XMCO as revealed by the Hausman test; while other explanatory variables do not. On the strength of the result, the study concludes that free trade has not made expected impact on export-import competitiveness in ESWACs. The study recommends that the governments of member countries of ESWACs should give more attention to trade regional blocs by investing massively on the real sector, so as to be able to contribute to economic growth - which will lead to higher degree of trade openness and better competitiveness in ESWACs.