Impact of local processing of agricultural raw materials on job creation in the West African Monetary and Economic Union

Abstract

Purpose. This work evaluates the relationship between the processing of agricultural raw materials and the level of employment in the West African Monetary and Economic Union (WAEMU). Methodology / approach. The Dynamic Common Correlated Effects (DCCE) estimation proposed by Chudik and Pesaran (2015) is used. The data for this study come from the World Bank and the International Labour Office and cover the Consumer Price Index, human capital, trade openness, foreign direct investment, and agricultural manufacturing industry for the period 1990–2019. Results. The results show that agricultural manufacturing, human capital and foreign direct investment have positive influences on job creation in WAEMU countries in the long term, even if this impact remains small. On the other hand, trade openness and inflation lead to a decrease in employment level. Indeed, the specialization in the export of unprocessed agricultural raw materials with low benefit, the massive import of consumer goods and the delay in terms of global competitiveness in most of these countries justify such results. Therefore, in order to boost job creation, it would be expedient to accelerate the process of developing local industries and promote the production of consumer goods. Originality / scientific novelty. Previous studies on local processing of agricultural raw materials have mainly focused on the production process and related constraints. However, very little work has been done on their effects on economic growth and job creation. This study fills this gap. It extends the existing literature on the causal relationship between local processing of agricultural raw materials and job creation. Finally, the Dynamic Common Correlated Effects estimator is used to address this issue. Practical value / implications. The information generated will be useful to a number of organizations, including: research centers, universities, governments, governmental and non-governmental organizations, to better guide the development and implementation of policies and strategies for job creation and unemployment reduction. Finally, by knowing the existing relationship between local processing of agricultural raw materials and job creation, as well as the limitations of this raw material processing policy, the study provides the different ways to improve the capacity for job creation and unemployment reduction. Research on this issue is too important to inform policy makers on the structural transformation of their economies to achieve full economic growth and reduce the unemployment problem.