Impact of Trade Policies and Institutions on Global Value Chain Participation in ECOWAS

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Abstract This paper investigates the impacts of institutions and trade policies on Global Value Chains (GVCs) participation in ECOWAS. Leveraging on the New Trade Theory as a theoretical framework, the study estimates a gravity model consisting of 15 ECOWAS members’ countries for the period 2000–2018. The paper control for the possible endogeneity and other econometrics issues like heteroskedasticity and autocorrelation by adopting Poisson Pseudo-Maximum Likelihood estimation method. The results revealed that institutions significantly enhance GVCs participation, this positive impact was maintained even when it was disaggregated into various subcomponents. The result, however, revealed that tariffs on intermediates, infrastructures, and technology are harmful to GVCs participation in the West African region, while the impact of RTAs on GVC participation has been mixed. This implicates the objective of improving GVCs among West African States through the formation of RTAs is dependent on the harmonization and implementation of low tariffs on intermediates, improve the level of infrastructures and technology within a framework of qualitative institutions.

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