Impact of Trade Balance on Current Account of ECOWAS Member Countries

—This study attempts to investigate the impact of trade balance on current account of ECOWAS Member State in a panel framework using a traditional panel. Data for 15 member countries were used for the period 2000-2016. The random effect model was used to draw a conclusion based on the outcome of the hausman test. The results revealed that trade balance significantly impact on current account balance. Specifically, merchandise export shows that more export improves current account balance while imports in merchandise reduce current account balance. Given the unchanged structure of the current accounts of the Balance of Payments of Member countries as a bloc, we conclude that an improvement of the trade balance is a precondition to the improvement of the current account balance. This can be done through long-term and sustainable substitution of imports with domestic production and also with effective export promotion. Increasing foreign direct investment and export promotion can be considered, in the longer term, the main way to improve the Trade Balance of member state.