Institutions, Governance, and Intra-regional Trade Margins: Complementarities or Reciprocity in the Economic Community of West African States?

This study investigates how institutional interactions shape bilateral trade dynamics within the Economic Community of West African States (ECOWAS), focusing on product-level trade composition, diversification, and the role of governance. Despite regional integration efforts, ECOWAS has seen limited export diversification and modest intra-regional growth in trade. Using a gravity model and detailed bilateral trade data, the study examines how the combined governance quality of trading partners influences trade flows, extensive margins (products per partner, and partners per product), and intensive margins (trade volumes, values, and average value per product per partner). The analysis highlights governance complementarities as key drivers of trade structure within the region. Results show that regulatory quality between trading partners is associated with greater product concentration, while complementarities in political stability support broader geographic market reach across trading partners. Reciprocity effects are also observed in the case of political institutions, suggesting that governance alignment reinforces trade ties. Voice and accountability displays a complementarity effect on the average value per product per partner, deepening bilateral trade relationships. These findings highlight the importance of understanding governance and institutions coordination and the interplay in enhancing intra-ECOWAS trade integration and carry broader implications for regional efforts such as the African Continental Free Trade Agreement (AfCFTA).