Extra-ECOWAS Trade and Investment Flows: Any Evidence of Business Cycles Transmission?

The effects of merchandise trade and investment flows - is investigated in this study - with regards to the transmission of business cycles between members of ECOWAS and the major trading partners between 1985 and 2014. Total trade and FDI significantly influence the transmission of business cycles with elasticities of 1.1% and 0.7%, respectively in the long run. There are little variations across the major trading partners and other measures of trade flows. Intra-industry trade flows with all partners, EU and USA influences the cross-country business cycles with elasticities of 1.0%, 0.5% and 1.8%, respectively. There is a weak evidence of trade and investment relationship with China transmitting business cycles in the long run, except in the case of total trade flows in the short run. Inter-industry trade flows also show weak tendencies of transmitting business cycles.