A SPATIAL ECONOMETRICS APPROACH TO THE IMPACT OF TRADE AND INVESTMENT ON ECONOMIC GROWTH

Abstract

This paper has studied the West African region or Economic Community of West African States (ECOWAS) which includes fifteen countries and its relationship with China. Three countries (Côte d’Ivoire, Ghana, and Nigeria) of the fifteen countries which are economically representative in the west African region to represent the overall-region were studied. Therefore, the objective of this study is to investigate the spatial effect of Chinese trade and investment on the economic growth of West Africa. The study focuses on the period from 1960-2014 using the dynamic panel data approach and spatial autoregressive approach for the econometric analysis of this topic. Empirically, the results show that trade openness with China has a positive impact on the neighboring countries of the region, especially for those who share the same border. Chinese investment is vital to the region’s economic growth as the results show that one dollar investment increase from China to the host country increases the economic growth in the neighboring countries by 0.328%.