Manufacturing Output and Labour Productivity: Evidence from ECOWAS

Abstract

The manufacturing sector is one growth enhancing, yet grossly neglected by many resource rich economies in Africa. It is adjudged critical to Africa economies due to its capacity to generate growth, accumulate wealth and tighten the inequality gap. The sector has been growing at a relatively slow rate, particularly due to the occurrence of four extreme inter-connected external shocks: fall in commodity (particularly oil) prices, global economic and financial crisis, and rise in energy and food prices which have worsened regional output and productivity levels. More importantly, the human capital component seems to be one major hindrance. To this effect, human capital channel is examined in this present re-examination. A static panel regression analysis was used to examine the effect of labour (controlled for technology) on manufacturing sector performance in ECOWAS region from 1990 to 2019. The study found that on the average, when controlled for technology, labour productivity significantly influence manufacturing sector in ECOWAS. Specifically, the availability of secure internet servers and individuals’ internet usage were more important and positively stimulate the influence of labour productivity on manufacturing output in the region.