SECURITY, POLITICAL STABILITY, AND ECONOMIC GROWTH IN WEST AFRICA: A DYNAMIC ANALYSIS OF THE WAEMU COUNTRIES

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In West Africa, economic growth remains closely tied to conditions that sometimes extend beyond the macroeconomic picture. Political stability, internal security, and social cohesion often constitute the true foundation or the main obstacles to prosperity. For over a decade, the West African Economic and Monetary Union (WAEMU) has experienced a period marked by a simultaneous deterioration in the security situation, including the spread of jihadism in the Sahel, urban instability, and cross-border banditry, and a political environment characterized by coups d'état, electoral crises, and the weakening of democratic institutions. In this context, traditional economic measures such as trade liberalization, investment incentives, and inflation control are struggling to achieve their goals until minimum security conditions and institutional predictability are restored.

This situation raises a central question: to what extent do efforts to ensure political stability and security influence economic growth in WAEMU countries? This issue is particularly important given that states in the region are allocating an increasing share of their budgets to defense, without always assessing the economic consequences. The primary objective of this article is to empirically assess the impact of political stability, two dimensions of security efforts (military personnel and military expenditures), and social inclusion policies on economic growth in eight member countries of the West African Economic and Monetary Union (WAEMU) over the period 2000–2021. Using indicators specific to the West African context, in particular the Equality and Inclusion Agenda, this study aims to provide a nuanced, rigorous, and actionable analysis that goes beyond the binary debate between security and development.

To achieve this objective, the article is structured as follows. The first section reviews the theoretical and empirical literature on the relationship between stability, security, and growth, highlighting existing gaps. The second section describes the methodology used a two-stage generalized moment model (GMM) with dynamic panel data and the data sources. The third section presents and analyzes the results, providing a direct comparison with the existing literature. Finally, the conclusion summarizes the main findings and provides specific recommendations for policymakers.

Theoretical Review

The economic literature has long established that institutional and security conditions are fundamental drivers of economic growth, particularly in developing countries. Theoretically, political stability is considered a key factor in reducing economic uncertainty. According to North (1990) [1], stable and predictable institutions reduce transaction costs, strengthen trust in contractual obligations, and facilitate long-term planning—all essential elements for capital accumulation and productive investment. From this perspective, political instability, such as coups, electoral crises, and chaotic transitions of power, increases the volatility of public policy, discourages economic actors, and impedes growth.

Furthermore, the theory of "institutional quality" (Keefer, 2004) [2] distinguishes not only formal stability but also the state's ability to consistently provide public goods. Acemoglu and Robinson (2012) expand on this logic by contrasting "extractive institutions," which are often unstable and elite-oriented, with "inclusive institutions," which are stable and promote innovation and the diffusion of productivity gains [3]. In this context, stability is not simply the absence of conflict, but an institutional system that guarantees fair and sustainable rules of the game.

In the context of security, economic theory distinguishes two opposing effects of security measures. On the one hand, an effective security apparatus can represent a vital public good, protecting infrastructure, ensuring the safety of people and property, and deterring crime conditions necessary for economic activity (Deger, 1986) [4].On the other hand, public resource allocation theory (Barro, 1990) emphasizes that excessive military spending or an excessive military can create a "crowding-out effect," diverting public resources from sectors with high social productivity (education, health care, infrastructure) [5]. This theoretical dilemma suggests that the impact of security on growth depends on the level, composition, and effectiveness of security measures. Finally, the theory of inclusive development (Borguignon, 2015) emphasizes that neither stability nor security alone are sufficient to ensure sustainable growth unless they are accompanied by social policies aimed at reducing inequality and strengthening social cohesion [6]. Without inclusiveness, political stability remains fragile, and economic benefits are distributed unevenly, which risks the emergence of new conflicts. This logic is particularly relevant in West Africa, where social inequalities (youth, unemployment, regional disparities) often create fertile ground for instability.

Empirical Analysis

Empirical studies largely support these theoretical propositions, although results vary depending on the geographic context, the period studied, and the indicators used. Alesina et al. (1996) [7], in a pioneering analysis of a group of countries, showed that the frequency of political crises and government changes significantly reduces real GDP growth. More recently, Keefer (2004) confirmed that political stability, measured by the absence of violent conflict and policy continuity, is a reliable indicator of growth in developing countries [2].

In the African context, several case studies confirm these results. Kaboré and Ouedraogo (2020) [8] note that among countries in the West African Economic and Social Union, those that have experienced peaceful democratic transitions (such as Senegal and Benin) consistently exhibit higher growth rates than countries marked by chronic instability (Guinea-Bissau, Mali after 2012). These results highlight the importance of the local institutional context in mitigating the impact of stability on growth. With regard to security measures, the results are more mixed. Gupta et al. (2002) [9] found that military spending tends to hinder growth in low-income countries, especially when it exceeds 2% of GDP. Conversely, Dunn and Nicolaidou (2012) [10] showed that in contexts of acute instability (e.g., in areas prone to terrorism or border conflicts), moderate security measures can have a positive short-term effect by restoring a minimum level of security for economic activity.

In the West African Economic and Social Union region, security concerns have significantly worsened in recent years, particularly with the spread of jihadism in the Sahel. Ouattara and Kone (2022) [11] note that military spending by member countries increased by nearly 40 percent between 2015 and 2023. However, this increase did not significantly improve growth rates, partly due to weak regional coordination, corruption in security governance, and a lack of integration with development policies. Finally, Kaufman et al. (2010), drawing on the Global Governance Indicators, convincingly demonstrate that growth is stronger in countries where political stability is accompanied by good governance (low levels of corruption, administrative efficiency, and respect for the rule of law) [12].

However, very few empirical studies have examined the moderating role of social inclusion policies, such as the Equality and Inclusion Program (EIP), in the relationship between security, stability, and growth in the West African Economic and Monetary Union (WAEMU) countries. The present study aims to fill this gap by integrating these aspects into a dynamic assessment conducted on a sample of eight WAEMU countries.

Gaps in the Literature and the Contribution of This Study

Despite the abundance of research on the relationship between security and economic growth, three gaps remain. First, few studies focus specifically on the West African Economic and Monetary Union (WAEMU), whose eight member countries are often combined into heterogeneous samples covering the entire sub-Saharan region, obscuring its institutional and environmental specificities. Second, the impact of armed personnel, a direct indicator of security force presence and distinct from military expenditures, remains largely understudied in the empirical literature. Finally, the interaction between political stability, security measures, and social policies such as the Economic Security Investment Program (ESIP), has rarely been rigorously analyzed.

This study aims to address these three gaps by providing a dynamic econometric estimate based on panel data covering eight member countries over the period 2000–2021. It takes into account political stability, quantitative measures of security efforts (military expenditures and military personnel density), and social inclusion policies as explanatory or moderator variables, allowing for a more nuanced and contextualized analysis of growth factors in this strategic region.

Methodology

1. Model Specification and Justification of the Econometric Approach

To assess the impact of political stability and security efforts on economic growth in the countries of the West African Economic and Monetary Union, we estimate a dynamic panel model based on the work of Babacar and Ibrahima (2018) [13], in the form:

Croiss = f (Personsarme, Effgouv, depmilitaire, stabpol, ide, polepip, infl)           (1)

In econometric form, the estimated regression model takes the form:

    (2)

Where Croiss denotes the annual GDP growth rate, Croiss(-1) its lagged value, Stabpol denotes political stability and the absence of conflict, PersarmA denotes the number of military personnel as a percentage of the population, and DepMilitaire denotes military expenditure as a percentage of GDP. Effgouv represents government effectiveness, PolEPIP is an indicator of equality and social inclusion policies, ide represents the inflow of foreign direct investment as a percentage of GDP, and Infl is the consumer price inflation rate. The term  denotes country fixed effects, and   is the idiosyncratic error term.

The inclusion of a lagged growth rate is justified by theoretical (conditional convergence, economic inertia) and empirical considerations, but introduces endogeneity bias into classical panel estimation (Nickell, 1981) [14]. To address this issue, we use the two-step differenced generalized method of moments (GMM) proposed by Arellano and Bond (1991) [15], which allows us to account for both the endogeneity of the lagged dependent variable and the endogeneity of other explanatory variables potentially correlated with unobserved shocks.

2. Data and Sample

Our sample covers eight WAEMU member states (Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo), and the study period is from 2000 to 2021. Data are primarily obtained from the World Bank (World Development Indicators, Global Governance Indicators) and from national sources for the PolEPIP index, which measures budgetary efforts for social inclusion [16],[17].

3. Estimation and Validation Results

The model estimated using the two-stage GMM method yields the following results (see table below). All standard deviations are asymptotically adjusted for heteroscedasticity [18].

Model: Two-stage dynamic panel, using 132 observations

Dependent variable: Croiss

Asymptotic standard deviations

Number of instruments = 28

Error testing AR(1) : z = -2,781 [0, 0054]

Error testing AR(2) : z = -1,51196 [0, 1305]

Sargan over-identification test: Khi-deux(20) = 18,0707 [0, 5828]

Test de Wald (joint): Khi-deux(8) = 688,116 [0, 0000]

The validity of the GMM estimation is based on three essential conditions, which we carefully check [19]:

1. Absence of second-order autocorrelation in the differential errors:

The AR(2) test yields z = -1.512 with a p-value of 0.1305, which fails to reject the null hypothesis of the absence of second-order autocorrelation. Thus, this condition is met, confirming the appropriateness of using lags as instruments.

2. Instrument validity (overidentification test):

The Sargen test (or the robust version of the Hansen test) yields a χ²(20) statistic of 18.071 with a p-value of 0.5828. This result suggests that the instruments are uncorrelated with the error term, confirming their exogeneity. 3. Overall Model Significance:

The joint Wald test (χ²(8) = 688.116, p-value < 0.0001) convincingly rejects the null hypothesis that all coefficients are zero, thereby confirming the overall significance of the model.

Interpretation and Discussion of Results

Estimating a dynamic model using a two-stage generalized method of moments (GMM) reveals differentiated, even contradictory, effects of security and governance dimensions on economic growth in the West African Economic and Monetary Union countries and offers a critical perspective on the existing literature.

The most striking result is the strongly positive and highly significant effect of political stability (Stabpol: +1.426, p < 0.001) on economic growth. This result quantitatively and robustly confirms the theoretical findings of North (1990) and the empirical results of Alesina et al. (1996) [20]: under conditions of uncertainty, institutional stability represents a fundamental public good that reduces the risks perceived by investors and improves the quality of public policy. This result is particularly relevant for the West African Economic and Monetary Union, where repeated political crises (Mali, Guinea-Bissau, Burkina Faso) coincided with a marked slowdown in growth, confirming the observations of Kaboré and Ouedraogo (2020)[8].

In contrast, the effect of security measures appears more subtle, revealing a significant difference between its two dimensions. Military personnel (PersarmA: -0.470, p = 0.042) has a negative effect, consistent with the classic "crowding-out effect" hypothesis (Gupta et al., 2002): excessive military presence diverts human and financial resources from productive sectors. In contrast, military expenditure (DepMilitaire: +0.229, p = 0.049) has a positive effect, which appears to contradict the existing literature but is explained by the critical security situation in the region. Unlike the global samples used in previous studies, our panel covers a region where physical security has become a prerequisite for any economic activity. This finding is consistent with the contextual findings of Dunn and Nicolaidou (2012) [10], who emphasize that the effect of military expenditure depends on the level of instability: negative in peacetime, it becomes positive during crises, when the goal is to restore minimal order.

Another original contribution is the significantly positive effect of social integration policies (PolEPIP: +1.196, p = 0.003). These policies, such as the EPIP program implemented in several countries of the West African Economic and Monetary Union, have been understudied in the growth econometric literature and prove to be much more than just instruments of social equity: they act as levers of economic resilience. This result empirically supports Bourguignon's (2015) [6] hypothesis that sustainable growth requires an inclusive social base and extends this logic to the post-crisis context, where social exclusion often fuels security tensions. The positive sign of inflation (Infl: +0.315, p = 0.001) may seem counterintuitive, but it is consistent with research on inflation thresholds (Khan and Senhadji, 2001) [21]. In West Africa, where the BCEAO pursued prudent monetary policy, moderate inflation likely reflects domestic demand dynamics or temporary absorption of supply shocks, rather than a loss of macroeconomic control. Finally, neither government effectiveness nor FDI are statistically significant in our analysis. This doesn't call into question their intrinsic importance, but it does suggest that in a context of security instability, these factors become secondary. Even a favorable business climate is insufficient to attract investment without guarantees of physical security a finding confirmed by recent reports from the African Development Bank and CNUCED on West Africa.

In conclusion, this study confirms the central role of political stability, clarifies the linear nature of security efforts, and highlights the untapped potential of inclusive policies as an engine of growth. By focusing on the homogeneous institutional structure of the Western Australian Economic Union, this study avoids the biases associated with generalizations often found in continental studies and offers insights directly applicable to regional policy.

Conclusion

This study demonstrates that in the West African Economic and Monetary Union (WAEMU), economic growth depends not only on traditional macroeconomic reforms but also, and especially, on the interdependent triad of political stability, effective security, and social inclusion. Institutional stability appears to be the most reliable determinant of economic performance, confirming that in times of security crises and political upheaval, predictability of the rules of the game takes precedence over all other factors. Security measures, in turn, are neither inherently beneficial nor systematically harmful: their impact depends on their configuration. An overly large military has a negative impact on growth by diverting human and financial resources from productive sectors. Conversely, targeted military spending, effectively implemented during acute crises, can play a stabilizing role, restoring a minimum level of security for economic activity. Finally, social inclusion policies, such as the Equality and Inclusion Promotion Programme (EIPPP), prove to be much more than just a redistributive mechanism: they represent a strategic investment in national cohesion, capable of strengthening both economic resilience and state legitimacy.

At a time when West Africa faces unprecedented security challenges, these findings clearly demonstrate that lasting security relies not only on arms but also on justice, institutional stability, and effective integration. It is in this synergy that lies the most promising path to strong, sustainable, and inclusive economic growth within the West African Economic Union. In light of these findings, we make the following recommendations to national and regional authorities:

1) Prioritize democratic and institutional consolidation: Strengthening the rule of law, guaranteeing transparent elections, and ensuring the continuity of public policies are essential for any sustainable growth strategy.

2) Optimize the structure of the armed forces: Limit excessive recruitment, which burdens public finances, and focus resources on operational capabilities (intelligence, mobility, regional coordination) rather than on quantitative expansion.

3) Integrate social policies into security strategies: Programs such as the National Security Investment Program (EPIP) should be strengthened and clearly linked to national security plans to address the social causes of instability (youth unemployment, regional inequality, social exclusion)

About the authors

Ano Tai Raphael

Author for correspondence.
Email: Tairaphael96@gmail.com

Graduate Student

References

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