Determinants of a successful regional trade agreement in West Africa

Abstract

In this paper, we evaluate the determinants of effectiveness of the Economic Community of West African States (ECOWAS) at promoting regional trade in West Africa between 1995 and 2010. We employ the modified gravity model (GM) that allows for the inclusion of country specific and country-pair characteristics in addition to the traditional GM variables (income and distance). Our findings reveal that economic size, distance, geographical factors such as common border, landmass, landlockedness of countries and socioeconomic variables like common language, political stability and availability of infrastructure significantly influence intra-regional trade within the ECOWAS region. We also find that the francophones dominated region (WAEMU) is exports trade creating while the anglophones dominated region (WAMZ) is trade diverting. Therefore, for ECOWAS to be successful in terms of facilitating intra-regional trade, current efforts at forming a synergy between WAEMU and ECOWAS should take cognizance of promoting trade between members, irrespective of colonial origin.