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Explaining the WAEMU Growth Spurt : The Role of Financial Deepening and Macro Policy

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World Bank (WB)

Abstract: Most countries of the West African Economic and Monetary Union (WAEMU) experienced a growth acceleration in 2011-17. This paper identifies the determinants of this growth by combining country-specific information with the results of a cross-country regression model. Growth was characterized by capital accumulation and driven by structural factors, including financial deepening and infrastructure development. What sets WAEMU countries apart from other African countries is the very sharp increase in private sector credit supporting private investment. This was facilitated by a prudent and accommodative regional monetary policy and improved financial regulation. Pro-cyclical fiscal policies supported public infrastructure investment but led to a buildup of public debt. Going forward, growth may lose some steam, given the renewed policy emphasis on fiscal consolidation and monetary tightening.
Type: Working Paper
Policy Research Working Paper
Publications & Research
Link: http://hdl.handle.net/10986/31077
Subject: ECONOMIC GROWTH
MACROECONOMIC POLICY
DETERMINANTS OF GROWTH
FINANCIAL SERVICES
FINANCIAL INCLUSION
DEEP INTEGRATION
MONETARY UNION
PRIVATE INVESTMENT
FINANCIAL REGULATION
CYCLICAL POLICY
INFRASTRUCTURE INVESTMENT
PUBLIC DEBT




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