Impact of Non-Oil Trade on Convergence of Per Capita Incomes of Ecowas Countries
Abstract
This study investigates the evidence of per capita income convergence in member countries of ECOWAS (1980–2015) and examines the impact of non-oil trade on the process to converge to ECOWAS average. The neoclassical theory of growth was used in the study to examine absolute and conditional convergence among the member countries. The descriptive statistics shows that the mean value of per capita income in ECOWAS in the period of review is $13577.8. This is higher than the median value ($12863); this indicates that most countries had GDP per capita under ECOWAS average. This suggests that some countries are escaping from poverty while others are trapped hence the need to aim at convergence towards this average within the sub region. The models specified include absolute and conditional convergence. Pedroni cointegration tests were used to test for stationarity and cointegration. It is evident from the results that there is absolute convergence. The conditional β-convergence based on non-oil trade shows a positive sign (0.006659) and is statistically significant. Based on the results, it is recommended that common trade policies should consider absolute and comparative advantages of member countries in moderating rules on trade liberalization.
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