A Dumitrescu-Hurlin Panel Causality Approach to the Financial Deepening-Agricultural Labour Productivity Interplay in ECOWAS

The agricultural sector remains quintessential to the Economic Community of West African States (ECOWAS) in terms of its contribution to gross domestic product and employment, so, agricultural labour productivity provides a clue to the living standards in this region. In theory, models such as the endogenous growth model suggest that finance plays a crucial role in respect of its ability to engender an expansion of the real sector. This study analysed the impact financial deepening exerted on agricultural labour productivity in ECOWAS between 2008 and 2017. Owing to possible endogeneity of the regressors, the instrumental variable techniques were prioritised. The empirical results from the techniques compared are unanimous – financial deepening has not exerted a significant impact on agricultural labour productivity within the ECOWAS region but life expectancy at birth and agricultural fixed capital formation per worker has. Thus, if the status quo is maintained, life expectancy at birth and agricultural gross fixed capital formation per worker are the variables that can drive agricultural labour productivity in ECOWAS. As per finance, concerted national and regional efforts are exigent in order to improve the availability of credit to agriculturists in ECOWAS if finance should become a lever for bolstering agricultural labour productivity in this particular region.