Structural transformation dynamics in ECOWAS countries: an empirical study of the interaction between internet penetration and foreign direct investment[Dynamique de transformation structurelle dans les pays de la CEDEAO : étude empirique de l'interaction entre la pénétration d'internet et les investissements directs étrangers]

Although the relationship between internet penetration and structural transformation, as well as the link between foreign direct investment (FDI) and structural transformation, have been studied separately, this paper examines the role of the interaction between internet penetration and FDI on the dynamic of structural transformation. The study is based on a panel of 15 ECOWAS countries and covers the period from 2000 to 2023. The results from the system generalized method of moments (GMM-sys) estimation show that foreign direct investment has a negative impact on the dynamics of structural transformation whereas internet penetration promotes this structural transformation process. Furthermore, the interaction between internet penetration and foreign direct investment has a positive impact on structural transformation. These results suggest the need to improve and to foster internet penetration and to channel foreign direct investment into the manufacturing sector in order to support a stronger structural transformation process in West African economies.