REVISITING THE EXPORT-OUTPUT NEXUS FOR WESTERN AFRICA COUNTRIES: A MARKOV SWITCHING CAUSALITY APPROACH

This paper examines the empirical relationships between exports growth and economic performance for western Africa countries using a non-linear Markov Switching VAR model in contrast with previous linear time series studies. We could not find causality from exports to GDP and vice versa in Benin, while causality is found only from GDP to exports in Senegal and Togo supporting the growth-driven exports (GDE) point of view, and from exports to GDP in Niger supporting the export-led growth (ELG) hypothesis. We find bi-directional regime-dependent causality between exports and GDP in Burkina Faso, Côte d’Ivoire and Mali where both hypotheses hold implying a virtuous circle of growth and exports.