Financial Integration, Trade Liberalisation and Inclusive Growth in the WAEMU

This paper aims to analyse the three‑way relationship between financial integration, trade openness, and inclusive growth. It seeks not only to determine how trade openness facilitates financial integration in the region and vice versa, but also, by combining these two types of integration, how they contribute to boosting GDP per capita growth in the countries of the Union. We estimate these relationships using dynamic panel data for the period 1996 to 2016. Our results indicate that the rate of trade openness and financial integration has a negative and significant impact on per capita economic growth. However, the econometric analysis of the results suggests that a positive relationship between public expenditure and the rate of economic growth per capita should be taken into account. In the long term, the results also show that the degree of trade openness and the economic growth rate per capita have a significant negative impact on financial integration.