Governance Quality and Capital Inflows in Selected Economic Community of West African States (Ecowas)

This study examines how governance quality affects capital inflows to the selected ECOWAS countries (Côte d'Ivoire, The Gambia, Ghana, Liberia, Mali, Nigeria, Senegal, and Togo) between 2002 and 2024. Government Effectiveness, Regulatory Quality, Rule of Law, Control of Corruption, and Political Stability on Foreign Direct Investment, Given the nature of this study, panel datasets were obtained from the World and IMF Financial Statistics. Descriptive statistics, cross-sectional dependence test, panel unit root and cointegration tests, as well as heterogenous panel model estimation, comprising mean group (MG) and pooled mean group (PMG) were used for the data analysis. The cross-sectional dependence test indicates that there is no cross-sectional dependence across the panels. The panel unit root test results showed evidence of mixed integration in the series. The panel regression estimates indicate that regulatory quality has a significant negative effect on FDI inflows, in the long run. The associated coefficient indicates that a one-unit increase in regulatory quality is associated with about a 13.80-unit reduction in FDI inflows in the long run. This suggests that regulatory changes may create compliance costs or institutional rigidities that discourage foreign investment within the sampled economies. The results further showed that the control of corruption had a positive and significant effect on FDI while Given the findings, this study recommends that ggovernments in the ECOWAS region should continue to strengthen public sector effectiveness through improved policy implementation, enhanced service delivery, stronger institutional capacity, and greater administrative efficiency to create more opportunities to attract foreign direct investment.