INCOME CONVERGENCE IN THE ECOWAS REGION

ABSTRACT

The incidence of cross-country per capita income convergence has been debated for long by economists; all in the attempt to either validate or reject the per capita income convergence hypothesis as predicted by the Human capital - augmented Solow model (HC-ASM). However, researchers seem to have given little attention to the Economic Community of West African State (ECOWAS) region in this ongoing discourse despite the wide per capita income disparity gap in the region.

Using panel dataset from 1975 to 2012 on 15 ECOWAS member states, the study examined the convergence hypothesis by employing panel Generalized Method of Moments (GMM). The study established per capita income divergence among the countries in the ECOWAS region, however the study established per capita income convergence among the West African Economic and Monetary Union (WAEMU) sub-group. These findings are in complete disagreement with the prediction of the HC-ASM and further suggest that regardless of the presence of Savings, physical capital stock and government expenditure, per capita income disparity gap among countries in the ECOWAS region tends to widen.

The study recommend that, poorer countries in ECOWAS should urgently pursue pragmatic policies to increase domestic savings and Gross physical capital formation accumulation and subsequently make efficient utilization of these resources to reduce the per capita income gap since both were found to positively impact on per capita income growth in the ECOWAS region.