ASSESSMENT OF INTRNATIONAL TRADE ON SELECTED SECTORAL PERFORMANCE IN ECOWAS COUNTRIES: A MEDIATING ROLE OF INDUSTRIALISATION

Abstract

This study investigates the impact of international trade on sectoral performance across the agricultural, manufacturing, and services sectors in fifteen Economic Community of West African States (ECOWAS) member countries, with a emphasis on the mediating role of industrialisation. Using panel dataset covering the period 2005–2024., sourced from World Development Indicators (WDI) and International Financial Statistics (IMF Data Portal). The study employs the Panel Autoregressive Distributed Lag (P-ARDL) model estimated through the Pooled Mean Group (PMG) approach to capture both short-run dynamics and long-run equilibrium relationships. Pre-estimation diagnostics confirmed the absence of significant cross-sectional dependence and mixed orders of integration among variables, validating the suitability of PMG-ARDL framework. The empirical findings reveal heterogeneous relationships across sectors. International trade proxied by Merchandise export significantly affects sectoral performance in the long run.Trade positively affects the agricultural sector, reflecting the dominance of primary commodity exports in ECOWAS economies. However, it negatively affects the manufacturing and services sectors, indicating weak spillover effects and limited structural transformation within the region. No significant short-run effects of trade were observed across the three sectors. The mediation analysis further reveals that industrialisation does not significantly mediate the relationship between trade and services sector performance. However, industrialisation partially mediates the relationship between trade and agricultural performance by transforming trade’s initial negative direct effect into a positive overall effect. In the manufacturing sector, industrialisation exhibits a suppression effect by intensifying the adverse impact of trade on manufacturing performance. The study concludes that although international trade significantly influences sectoral performance and promotes industrial development, the mediating role of industrialisation remains constrained by persistent dependence on primary commodity exports and weak industrial linkages across ECOWAS countries. The study therefore recommends policies aimed at export diversification toward higher value-added manufactured products, alongside increased investment in agro-industrialisation to strengthen productive capacity, enhance inter-sectoral linkages, and improve sectoral performance within the region.