FOREIGN TRADE AND PERFORMANCE OF MANUFACTURING SECTOR IN WEST AFRICAN MONETARY ZONE

Abstract

This study examined the impact of foreign trade on the performance of manufacturing sector in West African Monetary Zone (WAMZ). The objectives of the study were to; determine the impact of trade openness, exchange rate and trade restriction on manufacturing performance in WAMZ. The study used panel data that were sourced from World Development Indicators (WDI) and United Nations Conference on Trade and Development (UNCTAD) between 2010 and 2024 for six countries which are Nigeria, Ghana, Liberia, Sierra Leone, Gambia, and Guinea. The panel least squares method via the random effect model was used to generate the data. The results show that, trade openness is positively and significantly related with manufacturing sector performance in WAMZ between 2010 and 2024. Also, exchange rate had positive relationship with manufacturing sector performance. But trade restriction had negative relationship with manufacturing sector performance. The explanatory power of the estimated model is 61%. Based on the results, it was concluded that, foreign trade in terms of trade openness has same effect on the manufacturing sectoral performance. While trade restriction and exchange rate have mixed effect on manufacturing sectoral performances in WAMZ. Thus, it was recommended that, there should be a technical plan in trade openness in order to encourage value chain process in the manufacturing sector.