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<p>The Ease of Doing Business (EODB) indicators are a critical benchmark for assessing the regulatory environment. While the correlation between EODB and economic growth is well-established, the impact on specific sectors and the indirect effects through the rule of law, political stability and absence of violence/terrorism, and voice and accountability are less explored. This study addresses this gap by providing an in-depth analysis of the differential effects of individual EODB indicators/index on economic growth and sectoral output (service, industrial, agricultural, and manufacturing) and exploring the indirect pathways through which the EODB index influences economic growth and sectoral output in West African economies from 2004 to 2020 using data from the World Bank Ease of Doing Business. Employing PMG-ARDL and structural equation model estimation techniques, the findings reveal the heterogeneous impact of individual EODB indicators on sectoral outputs. However, the overall EODB index significantly boosts GDP, service, industrial, and manufacturing sectors. The rule of law emerges as a significant mediator, accounting for approximately 27% of the EODB index’s total effect on GDP growth, with political stability and absence of violence/terrorism contributing to a lesser extent (7%). Interestingly, the study finds no significant mediation effects of the EODB index on sectoral outputs through the examined mediators, highlighting the complexities of translating business environment improvements into sector-specific growth. The study recommends that policymakers adopt an integrated reform approach, prioritizing governance mechanisms such as the rule of law and political stability and facilitating trade to amplify the positive effects of EODB reforms on economic and sectoral growth in West Africa.</p> Graphical Abstract <p></p>

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The Mediating Mechanisms of How Business Environment Affects Sectoral Productivity in West Africa

  • 期刊论文

  • 发表日期：

    2025年2月24日

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  • Clement Mintah,
  • Mark Awe Tachega,
  • Junjian Wang,
  • Samuel Kwofie,
  • Elizabeth Addy,
  • George Prince Aning-Agyei,
  • Richard Apatewen Azerigyik,
  • Abigail Arthur

摘要

The Ease of Doing Business (EODB) indicators are a critical benchmark for assessing the regulatory environment. While the correlation between EODB and economic growth is well-established, the impact on specific sectors and the indirect effects through the rule of law, political stability and absence of violence/terrorism, and voice and accountability are less explored. This study addresses this gap by providing an in-depth analysis of the differential effects of individual EODB indicators/index on economic growth and sectoral output (service, industrial, agricultural, and manufacturing) and exploring the indirect pathways through which the EODB index influences economic growth and sectoral output in West African economies from 2004 to 2020 using data from the World Bank Ease of Doing Business. Employing PMG-ARDL and structural equation model estimation techniques, the findings reveal the heterogeneous impact of individual EODB indicators on sectoral outputs. However, the overall EODB index significantly boosts GDP, service, industrial, and manufacturing sectors. The rule of law emerges as a significant mediator, accounting for approximately 27% of the EODB index’s total effect on GDP growth, with political stability and absence of violence/terrorism contributing to a lesser extent (7%). Interestingly, the study finds no significant mediation effects of the EODB index on sectoral outputs through the examined mediators, highlighting the complexities of translating business environment improvements into sector-specific growth. The study recommends that policymakers adopt an integrated reform approach, prioritizing governance mechanisms such as the rule of law and political stability and facilitating trade to amplify the positive effects of EODB reforms on economic and sectoral growth in West Africa.

Graphical Abstract