Munich Personal RePEc Archive

Can Western African countries catch up with Nigeria? Evidence from Smooth Nonlinearity method in Fractional Unit root framework

Yaya, OlaOluwa S and Ling, Pui Kiew and Furuoka, Fumitaka and Ezeoke, Chinyere Mary Rose and Jacob, Ray Ikechukwu (2018): Can Western African countries catch up with Nigeria? Evidence from Smooth Nonlinearity method in Fractional Unit root framework.

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Abstract

West African countries have long advocated efforts to promote economic integration and income convergence. In recent trends, Nigeria records the highest GDP in nominal value, yet its neighbouring countries are yet to catch up in terms of both GDP growth rate and GDP per capita growth rate. The general objective of this paper is to examine the convergence of Western African countries to catch up with Nigeria in terms of real per capita income. For the estimation, the paper employs fractional unit root approach to model simultaneously smooth breaks by means of flexible Fourier function in time. The approach adopted is novel, where it is still lacking in the application of economic convergence across countries. The findings show that, while some West African countries do converge among themselves, only Ghana is likely to catch up with Nigeria. As a policy implication, the West-African countries would increase further education level and technology transfers to promote income convergence at different stages of economic development.

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