Trade Openness, Inflation and GDP Growth: Panel Data Evidence from Nine (9) West Africa Countries

Abstract

The underlying purpose of this study is to determine the effects of Trade openness and inflation on the GDP growth for nine West-African Countries for the period from 1998 to 2017. The data used in this study are secondary data sources derived from the World Development Indicators (WDI) of the World Bank over the period 1998-2017. This study employed pooled Ordinary Least Squares (OLS), Fixed Effects and Random effects test with panel data in arriving at the results. This study has Trade Openness (OPEN), Inflation (INFLA), Real Exchange Rate (REER) and Investment (INVEST) as independent variables and GDP growth rate as a dependent variable. The results show that inflation has a negative and significant impact on GDP growth in using pooled OLS and Random whiles having an insignificant impact on GDP with the fixed effect test. Trade Openness has a significant negative impact on GDP using the pooled OLS and an insignificant impact using the fixed and Random effects tests. Real Exchange rate showed a positive significant impact in all the tests whiles investment showed an insignificant impact in all the tests.