چکیده:
this study investigates the effects of extra-ECOWAS merchandise trade and investment flows on the transmission of business cycles in the selected ECOWAS between 1985 and 2014. The study finds that total trade and foreign direct investment (FDI) significantly influence the transmission of business cycles with elasticities of 1.1 and 0.7, respectively in the long run. There are little variations across the major trading partners and other measures of trade flows. Intra-industry trade flows with all partners, EU and USA influences the cross-country business cycles with elasticities of 1.0, 0.5 and 1.8, respectively. There is a weak evidence of trade and investment relationship with China transmitting business cycles in the long run, except in the case of total trade flows in the short run. Inter-industry trade flows also show weak tendencies of transmitting business cycles. This study recommends greater needs to encourage trade (particularly, intra-industry) and foreign investment with the major trading partners. This, however, requires investment in critical infrastructure and upgrade of domestic technology to be deeply involved in global values chains necessary for the transmission of the desired business cycles. In addition, there is a need to diversify the export base and increase domestic investment to compliment foreign investments in order to minimize undesired business cycles spillovers that can undermine ECOWAS stability.
خلاصه ماشینی:
Foreign Trade and International Financial Flows: Implications for Economic Stability in the Selected ECOWAS Countries Solomon Abayomi Olakojo*1 Received: March 3, 2017 Accepted: April 13, 2017 Abstract his study investigates the effects of extra-ECOWAS merchandise trade and investment flows on the transmission of business cycles inthe selected ECOWAS between 1985 and 2014.
Keywords: ECOWAS, Foreign Trade, International Financial Flows, Cross-Country Business Cycles, Stochastic Technology Shocks.
For instance, available data from World Development Indicators (WDI) shows that foreign trade accounts for over 70% of Gross Domestic Product (GDP) of some of the members of Economic Community of West African States (ECOWAS) such as Togo and Cote d'Ivoire.
Exchange of goods belonging to different industries Table 2: Share of High-Technology1 Manufactured Exports in Total Manufactured Exports of The Selected Countries Selected Members of ECOWAS Selected Major Trading Partners Source: World Development Indicators (2015) Note: CIV, NIG, GHA, SEN, TOG, GMY,SPN, FRA, UK, NLD, CHN, USA represents respectively, Cote d'Ivoire, Nigeria, Ghana, Senegal, Togo, Germany, Spain, France, United Kingdom, Netherlands, China and United States of America.
For instance, the cross-country business cycles of between a pair of the selected members of ECOWAS and the major trading partners averaging 0.
Hence, this paper contributes as the first logical analysis of the effect of international trade and financial flows on the business cycles synchronization between selected ECOWAS countries and the major trading partners.