Does China’s Growing Economic Engagement Hamper Intra-regional Trade in ECOWAS?

University essay from Lunds universitet/Ekonomisk-historiska institutionen

Abstract: The rapid growth of China’s economic influence in the Economic Community of Western Africa (ECOWAS) in recent decades has raised concerns about its impact on many aspects of economic development in the region. One issue is the potential negative impact on intra-regional trade, as the influx of Chinese imports could harm local industries while the growing commodity exports to China could reinforce resource dependency. This study examines the relationship between ECOWAS countries’ growing economic engagement (including trade, FDI and construction) with China and intra-regional trade in the region by employing a quantitative approach based on the gravity model of international trade. The main findings can be summarized as follows: 1) Chinese economic engagement is found to be a significant determinant of intra-regional trade patterns in ECOWAS; 2) imports from China seem to have an overall positive impact on intra-regional trade, particularly for poorer ECOWAS countries; 3) Chinese engineering and construction projects generally seem to contribute to intra-regional trade; 4) the impact of exports to China appears to vary substantially depending on country- characteristics; and finally, 5) FDI is found to have either negative or no impact on intra-regional trade. The findings show that the relationship between Chinese economic engagement and intra-regional trade is complicated and it varies depending on country-characteristics.

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