Industrial Policies and Manufacturing Sector Output Growth in Selected West African Countries

Abstract

The study investigated the impact of industrial policies on manufacturing sector output growth rate in selected West African Countries. Data spanning 2000 to 2023 were collected on the manufacturing sector output growth rate (MOG), exchange rate (EXCHR), domestic credit to the private sector (DCPS), trade openness (TOP), and foreign direct investment (FDI). The fully modified ordinary least squares (MOLS) estimation technique was used in the model estimation. The findings revealed that the exchange rate had a positive and significant impact on the manufacturing sector's output growth rate. The finding implies that an effective exchange rate policy would have a positive and significant effect on manufacturing sector output growth in the selected West African Countries. Domestic credit to the private sector had a negative and significant effect on the manufacturing sector's output growth rate in the selected African countries. implying that effective credit to private sector has the potential of enhancing the manufacturing sector's output growth rate. Trade policy (TOP) had a negative and insignificant effect on manufacturing sector's output growth rate. The study revealed that industrial policy (exchange rate policy, credit policy, and trade policy) impacted manufacturing sector output growth differently in selected West African countries. Based on the findings, the study recommended that the governments of the selected West African countries should strengthen industrial sector’s policies to promote the manufacturing sector's output growth rate.