Impact of Exchange Rate Regimes on Economic Integration in the ECOWAS (1980-2017)

Abstract

The study investigated the impact of exchange rate regimes on economic integration in the ECOWAS from 1980 to 2015. Secondary annual data were used for the study. Annual data on variables such as trade openness, real gross domestic product, per capita income, transport cost, common language, tariff and exchange rate covering the period from 1980 to 2018 were sourced from the World Development Indicators (WDI) of the World Bank, 2017 edition. Data collected were analysed using econometrics technique of panel panel fixed effect model. The study found that the coefficients of per capita income, transport cost, common language and exchange rate regimes have positive and significant effect on economic integration in the ECOWAS while coefficients of real gross domestic product and tariff have a negative effect of economic integration in the ECOWAS.  The result implies that a unit increase in exchange rate regimes will lead to 0.13% deepening of the economic integration in the ECOWAS. The study concluded that exchange rate regimes plays an important role in promoting economic integration in the ECOWAS.