Trade openness and economic growth in Africa's regional economic communities: empirical evidence from ECOWAS and SADC

Abstract In light of increasing globalisation, countries do not just open their economies to trade; some factors have to be influenced. This study analyses the relationship among trade openness and macroeconomic outlook of Africa's regional economic communities (RECs), focusing on the Economic Community of West African States (ECOWAS) and Southern African Development Community (SADC). The study applies the Pooled OLS, Fixed and Random Effects techniques of estimation and the Durbin-Wu Hausman test for endogeneity to categorised secondary data from the World Bank's World Development Indicators (WDI) and the United Nations Conference on Trade and Development (UNCTAD) databases. The datasets are classified into three segments for comparative analysis, comprising the total, ECOWAS, and SADC datasets. The results show a positive but insignificant nexus between economic growth rate and trade openness in both the combined simulated ECOWAS and SADC and the individual REC. The results emphasise that the government and other relevant stakeholders should ensure policies are enacted and enforced to transmit the experienced economic growth into substantial trade gains and further trade openness in ECOWAS and SADC.