The application of knowledge stylised facts in West Africa Economic and Monetary Union (WAEMU)

Amanzou, Nogbou Andetchi Aubin; Ballo, Zie; Troupa, Sery Guy Flavien Article The application of knowledge stylised facts in West Africa Economic and Monetary Union (WAEMU) Journal of Innovation and Entrepreneurship Provided in Cooperation with: Springer Nature Suggested Citation: Amanzou, Nogbou Andetchi Aubin; Ballo, Zie; Troupa, Sery Guy Flavien (2022) : The application of knowledge stylised facts in West Africa Economic and Monetary Union (WAEMU), Journal of Innovation and Entrepreneurship, ISSN 2192-5372, Springer, Heidelberg, Vol. 11, Iss. 1, pp. 1-20, https://doi.org/10.1186/s13731-022-00233-4 This Version is available at: https://hdl.handle.net/10419/290224 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ The application ofknowledge stylised facts inWest Africa Economic andMonetary Union (WAEMU) Nogbou Andetchi Aubin Amanzou1* , Zie Ballo2 and Sery Guy Flavien Troupa3 Introduction The economic facts of Sub Saharan countries have been stylized by Ferreira and Ravaillon (2008) based on the data collected. The authors established three key stylized facts: (i) the absence of a correlation between growth rates and changes in inequality among developing countries; (ii) the strong (positive) correlation between growth rates and rates of poverty reduction, and (iii) the importance of inequality to that relationship (Ferreira & Ravallion, 2008, p. 4). It emerges that economic growth is not sufficient to fight against poverty in Sub Africa. In fact, 41% of the people living in Sub African countries Abstract Sub-Saharan Africa has one of the dynamic economies in the world. Unfortunately, the performance achieve has not led to a reduction of social issues. So, the government are making massive investment to overcome social issues. This massive public investment highlights the exogenous nature of the current economic growth. So, a change of the strategy in the economic management of sub-Saharan Africa is required. One solution remains the change of economic paradigm: the transition from exogenous economic with decreased return to endogenous economic with increased return. The theoretical explanation of such arguments are supported by New Growth Theory. However, the implementation of the new theory required compliance to a set of indicators known as stylized facts. In 2009, Romer and Jones have developed a list of stylized corresponding to the need of New Growth Theory. The stylized facts of the West African Economic and Monetary Union (WAEMU) have been compared to the standard facts of Romer and Jones in order to apply the recommendations of New Growth Theory in this area. To reach that aim, the stylized facts have been described and analysed with econometric panel model. As result, we find that the description of the stylized facts in WAEMU fitted perfectly with that of Romer and Jones for the same period. Unfortunately, when using data, institution don’t work as expected by Romer and Jones. This study strengthens the argument for the implementation of economic policy based on the valorisation of knowledge economic in WAEMU. Keywords: Economic growth, Economic development, Knowledge economic, Macroeconomic Analyses, Africa JEL classification codes: O40, O17, D83, O11, N17 Open Access © The Author(s) 2022. Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http:// creat iveco mmons. org/ licen ses/ by/4. 0/. RESEARCH Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 https://doi.org/10.1186/s13731-022-00233-4 Journal of Innovation and Entrepreneurship *Correspondence: [email protected].ci 1 Present Address: Knowledge economics at Université Virtuelle de Côte d’Ivoire, 01 BP 130 Abidjan, Côte d’Ivoire 2 Economics of Development at Université Felix Houphouët Boigny, Abidjan, Côte d’Ivoire 3 Economics of Development at Université Alassane Ouattara, Bouaké, Côte d’Ivoire Page 2 of 20 Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 were poor in 2015 (World Bank Group, 2018, p. 10) while the region had grown by more than 5% during the last fifteen years (Imf, 2016, p. 1). In order to reconcile economic growth, and social issues, the authorities are implementing several socials actions to target the most disadvantaged social groups. Ben Hammouda (2002) cites five sectors identified by social policies in Central Africa: health, education, basic infrastructure, governance, and rural development (Ben Hammouda, 2002, p. 103). So, the massive implementation of social policies on Sub Africa highlights the exogenous nature of the economic growth model applied in this area. A change of course is required (IMF, 2016) in the economic growth model. This change could be achieved by changing the current exogenous growth model into a strong endogenous one. The transition from an exogenous economy to endogenous economic is possible with the use of knowledge as production factor (Romer, 1986) instead of physical capital. "The use of knowledge is justified by the existence of increasing returns and a significant amount of externalities” (Nogbou Andetchi Aubin etal., 2017, p. 4). The increasing return leads to the sustainability of the economic growth and the externalities ensure the empowerment of related sectors of activity. Knowledge has an explicit part and an implicit part. Explicit knowledge is obtained through academic production and implicit knowledge is produced locally by the interaction among people. Explicit knowledge is available on the book and can be transmitted while implicit knowledge is difficult to collect as the owner do not mastered the rules that lead them (Tsoukas, 2005). By mobilizing and leveraging the local knowledge produced, countries could produce local innovations (Nonaka & Takeuchi, 1995) that would induced endogenous economic growth. The field that focus on knowledge in economic growth is the called: New Growth Theory. The New Growth Theory promises inclusive and sustainable growth but it requires compliance with a set of indicators known as stylized facts. In fact, the notion of stylized facts was introduced into economics by Nicolas Kaldor in the 1960s. In 1989, Romer added five stylized facts to Kaldor’s. Jones completed the list with three new facts in 2001. Romer and Jones will finally develop a new list in 2009, about 50years after the primary stylized facts of Kaldor. The list of the six stylized facts established by Jones and Romer (2010) is: (i) Increases in the extent of the market; (ii) Accelerating growth (iii) Variation in modern growth rates; (iv) Large income and total factor productivity (TFP) differences; (v) Increases in human capital per worker; (vi) Long-run stability of relative wages. These new stylized facts were established on four variables: ideas, population, human capital and institution. Methodology The methodology of the article is twofold: the description of knowledge stylized facts and the empirical analysis of the stylized facts. Each methodology has its own targets and used its own tools. The description of stylised facts aims to match stylised facts in WAEMU and stylized facts of Jones and Romer (2010) in order to make some similar recommendations for economic growth in WAEMU. The main tool used to make this description is the figures based on empirical data collected by Word Development Indicators (WDI) 2018, International Monetary Fund (IMF) (GFS & WEO) 2011, Penn World Tables and Barro & Lee, (2013). So, the analysis of stylised facts aims to establish Page 3 of 20 Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 some relationship between proxies of stylized facts based in order to advise some priorities based on the empirical data collected by Word Development Indicators (WDI). The main tool used for this analysis is the econometric model of RAO (2010). The model allows the inference of coefficients based on empirical data et showed the importance of each variable for economic growth. Description ofknowledge stylized facts inWAEMU It’s important to analyse the stylized facts of the area and compared them to the standard facts of Jones and Romer (2010) in order to apply the recommendations of the new economic growth theory to the WAEMU. To reach that end, the facts will be categorized into two groups: overall growth and overall income. Each group will contain three facts. Overall growth The notion of overall growth covers three stylized facts: (1) increase in the extent of the market, (2) accelerating growth and (3) variation in modern growth. These stylized facts are addressed below. Increases intheextent ofthemarket After the Second World War, many markets (goods and services, financial, ideas and innovations…) was in hyperactivity all over the world. These activities accentuated the phenomenon of globalization and urbanization. So, the level of globalization and urbanisation was different from an area to others. This difference can be explained by local realities. Globalisation is seen as the integration of several markets and the connexion of people from different areas. In the context of the WAEMU, globalization was intended on the one hand and imposed on the other. The desire for globalization is seen through economic integration and is expressly reflected in the objectives assigned to the integrated area. Eight countries have joined WAEMU in order to increase the extent of their local markets through integration (Objective 3 of WAEMU): Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. To facilitate the reach of this objective, WAEMU has implemented a number of policies concerning: (i) a customs union; (ii) a regional financial market; (iii) a common commercial policy and (iv) community competition legislation. The customs union concerns the liberalisation of intra-zone trade and the establishment of the Common External Tariff (CET). The CET was gradually introduced in the 2000s and is intended to be an instrument for harmonising the trade policy of member countries vis-à-vis the outside world. The importance of the intra-zone trade was also addressed from July 1996 and is mainly reflected in tariff reductions on intra-zone trade in the WAEMU. The common trade policies implemented in WAEMU have a bilateral and a multilateral component. The bilateral component concerns trade relations between countries. In terms of bilateral relations, the Union has standardized the bilateral relations of the member countries by substituting the bilateral agreements concluded by each member country with multilateral agreements of WAEMU with third countries. The multilateral component concerns trade relations between member countries and international Page 4 of 20 Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 organisations. Under multilateral agreements, WAEMU has undertaken to notify its multilateral trade and investment agreements to the World Trade Organization (WTO). The purpose of Community competition legislation is to ensure a better functioning of the common market. The Community’s anti-competitive legislation, which came into force in January 2003, prohibits agreements between companies, the abusive exploitation of dominant positions, aid granted by member countries to companies likely to distort competition, anti-competitive practices attributable to member countries. The effective establishment of WAEMU’s regional financial market took place in September 1998 with the creation of the Regional Stock Exchange (BRVM). The BRVM aimed to collect internal savings as an alternative to bank loans. In accordance with Articles 4, 16(d), 96 and 97 of the WAEMU Treaty, capital movements between WAEMU Member countries are free and without any restrictions. Unfortunately, the current extent of the globalization in WAEMU cannot be explained solely by the economic integration of WAEMU member countries. This statement is true if we took into account the low level of intra-zone trade in the WAEMU compared to that of others integrated areas of the world. The share of intra-zone exports between WAEMU Member States is estimated at 12.6% in 2015 compared to 20.9% in the Southern African Development Community (SADC) and 61.6% in the European Union (CNUCED & UNCTAD, 2016). Notwithstanding the efforts of member countries to achieve integrated markets, the stylized facts of Jones and Romer (2010) showed an upward trend in the size of all global markets (integrated and non-integrated) driven by globalization. To highlight this observation, globalization is approximated by international trade and foreign capital. International trade is described as the value of a country’s imports and exports. The WAEMU organisation includes eight countries with economic internal and external transactions. The value of trade in the area have been synthesized by the arithmetic average of the annual imports and exports of each country in the area as a percentage of Gross domestic product (GDP). The value of the foreign capital is represented by Foreign Direct Investment (FDI) as a percentage of GDP. The arithmetic average of the FDIs of each country in the area made it possible to obtain the average FDI of the whole area. Result anddiscussion Figure1 shows that the trends in international trade and foreign capital investment in WAEMU are upward in accordance with the general observation made by Jones and Romer (2010) over the period 1960–2010. According to Jones and Romer (2010), the world international trade as a percentage of GDP has doubled between 1960 and 2010. In the WAEMU countries, the level of international trade has also doubled over the period 1960–2010. The average in 1960 was 34.059 compared to 68.887 in 2010, representing an annual average change of 0.01%. Jones and Romer (2010) have shown that the FDI increased in the world over the period 1960–2010. The FDI has also increased from 0.7504 in 1960 to 3.6472 in 2010 in WAEMU for an average annual variation of 3.86% over the period. The FDI has increased overall for the region, demonstrating the dynamism of the region’s markets. Urbanization, on the other hand, is defined as the concentration of the population in urban areas. Seen as a market potential, urbanization in the WAEMU is a challenge to overcome because the member countries are struggling to cope with an uncontrolled Page 5 of 20 Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 exodus. Among the challenges caused by urbanization are the problem of access to drinking water, sanitation, electricity, health and the environment. The amount of investment required to ensure a minimum level of well-being remains a constraint for government budget under pressure. To face the urbanization issues, WAEMU has set up the Regional Indicative Programme for Urban Development (PIRDU) for a period of 10years (2009–2018). This programme aimed to strengthen the driving role of the Union’s cities in terms of attractiveness and competitiveness; to improve the living conditions and environment of urban populations within the Union; to facilitate the emergence of secondary cities and equipped relay cities; to strengthen decentralisation processes, governance and civic participation of local authorities and the various stakeholders in the life of their cities. The globalization and rapid urbanization of the WAEMU make it possible to explain the expansion of markets, but not its impact, because of the enormous challenges of efficient intra-zone trade and controlling urbanization issues’. A gap between the potential of the region and the use of this potential therefore arises for decision-makers. The concern for challenges must not overshadow the potential of a rapidly expanding market with an ever-increasing urban population. The integration of the countries of the WAEMU is undoubtedly an opportunity that the member countries have not yet exploited. The large population and the flow of foreign innovation and technologies should make it possible to improve the region’s performance by taking them into account. The pace of the area’s performance must be able to inform us about the effects of globalization. Successful globalization will therefore result in accelerated and inclusive growth and virtual globalization will lead to slow and non-inclusive growth. To analyse the rate of growth according to population, Jones and Romer’s Fact 2 is studied below. Accelerating growth The facts of economic growth in United States of America and twenty Western European countries have been empirically studied by Maddison (2007). He showed that GDP increased slowly before the 2000s and grown rapidly (× 100) over the last two centuries. Jones and Romer (2010) noted that this strong contemporary eco- 0 10 20 30 40 50 60 70 80 0 0.5 1 1.5 2 2.5 3 3.5 4 1960 1970 1980199020002010 Uemoa FDI/Uemoa GDP (%, echelle de droite) Uemoa Trade / Uemoa GDP (%, echelle de gauche Fig. 1 International trade and foreign capital investment in WAEMU. Source: World development Indicators, 2018 Page 6 of 20 Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 nomic growth is characterized by a concomitant increase of population and per capita income. The linkage between growth and population highlighted by the authors is indirect. According to them, the increase in population rate lead to the increase of the stock of knowledge held individually by these populations and then, the used of the knowledge improve the growth rate. Jones (2005) have already established the linkage between knowledge stock and economic growth under the title of “Sources of US economic growth in a world of ideas”. In WAEMU, the concept of population includes all individuals living in the Member countries. With a population of over 100 million, the area provides lot of ideas. According to the New Growth Theory, the large stock of ideas leads to a dynamic efficiency of economic growth. To estimate the link between population and economic growth in WAEMU, the number of individual living in the area was used as a proxy of population and GDP per capita was used as proxy of population well-being. An increase in GDP per capita is considered to be an increase in the well-being of the population notwithstanding inflation rate. Result anddiscussion Figure2 shows that the population trend and the GDP per capita of the WAEMU upward together. A large and growing population with increasing incomes means an efficient and hard-working population. Well-being is also valued through the general level of poverty. On the basis of national poverty lines, the incidence of poverty in WAEMU for 2010 is estimated at 49.4%. Considering the US$1.25 per day threshold recommended by the World Bank, the poverty rate would be reduced to 39.8% in the WAEMU (BCEAO, 2012). This analysis shows that GDP per capita grown in many countries of WAEMU in the area while poverty affects nearly 40% of the population. The incidence of GDP per capita on poverty rate is very weak, which suggest that growth in the WAEMU is not inclusive. However, the degree of inclusion of populations differs from one country to another. The choice of indicator for calculating the incidence of poverty clearly influences the extent of economic performance at the social level. However, the improvement in the economic framework remains absolutely positive, and the sustainability of the integration of the WAEMU area therefore requires collective actions and targeted individual actions in order to ensure the effectiveness of economic convergence among member countries. 0 500 1000 1500 2000 2500 0 2000000 4000000 6000000 8000000 10000000 12000000 14000000 16000000 1990 1995 2000 2005 2010 2015 GDP per Capita Population Fig. 2 Population and GDP per capita. Source: World development Indicators, 2018 Page 7 of 20 Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 Moreover, the size of the population is not sufficient to explain the WAEMU’s economic performance. The economic performance in the area can also be explained by the rhythm of the ideas transmission. The ease of intra-zone migration and the adoption of harmonised legislation are economic policies that facilitate the flow of ideas within the area. In 2009, WAEMU adopted a regulation that facilitate the movement of persons, residence, provision of services and the right of establishment. This recognition was aimed at two approaches: the internal approach and the external approach. The internal approach concerns union citizens’ migration. The free movement of persons, residence, provision of services and the right of establishment is accepted within the treaty establishing WAEMU in 1995. To this end, some corporations have been submitted to specific directives and regulations. These directives and regulations include students who are citizens of the Union (Directive No. 01/2005/CM/UEMOA), Union doctors (Directive No. 06/2005/CM/UEMOA), Union architects (Directive No. 07/2005/CM/UEMOA), Union accountants (Regulation No. 05/2006/CM/UEMOA), Union lawyers (Regulation No. 10/2006/CM/UEMOA), Union pharmacists (Directive No. 06/2008/CM/UEMOA), Union dentists (Directive No. 07/2008/CM/UEMOA). However, the effectiveness of free movement seems to be a problem in practice. The external approach concerns non-union citizens’ migration. The standardisation of legal policy towards non-union citizens is reflected in the harmonisation of Member States’ external policies with the countries outside WAEMU. This desire for uniformity has resulted in the establishment of specific directives and regulations. Additional Act No. 01/2009 / CCEG/ UEMOA of 17 March 2009 made it possible to establish a common WAEMU policy on the migration and residence of non-citizens of the Union and Regulation No. 06/2009/CM/UEMOA of 26 June 2009 granted mutual recognition to visas issued by WAEMU Member countries. The external approach can be subdivided into two dimensions. Non-citizens who are members of the Economic Community of West African States (ECOWAS) and non-ECOWAS nationals. In this regard, Article 4 of Regulation No. 06/2009/CM/UEMOA clearly states that citizens of ECOWAS are exempt from the requirement for entry visas into the territory of WAEMU, unlike non- ECOWAS citizens. The purpose of mutual recognition of visas is to implement a single WAEMU visa. Another strong action of integration is the harmonization of economic activities. Harmonisation allows companies to move easily around the area. Companies wishing to get closer to the areas where the resources of ideas and/or human capital are easily produced. Whether geographical or virtual proximity, the removal of legal constraints in the business world facilitates the mobilization of local knowledge. Within the framework of the WAEMU, two (02) sectors will influence the improvement of the business world: commercial enterprises and insurance. The most significant contributions have been done by the Organisation for the Harmonisation of Business Law in Africa (OHADA) and the Inter-African Conference on Insurance Markets (CIMA). So, the analysis of the impact of these reforms will be carried out in the WAEMU territory. The growth of the area is not experienced in the same way by each country. An analysis of each country’s individual performance over time will be carried out through Fact 3 proposed by Romer and Jones on the heterogeneity of growth rates and the impact on performance. Page 8 of 20 Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 Variation inmodern growth rates The economic growth in the whole world accelerated from the 1990s onwards. This acceleration was attributed to the existence of a residual factor. Solow (1956, 1957) concluded that technological change and later technological change could be this residual factor. The residual factor evoked by the neoclassic is an exogenous factor not induced by human voluntary action. Solow’s model, which results from taking into account the residual factor, like all neoclassical growth models, admits the existence of decreasing returns in the use of factors of production whose lead is ensured by the capital factor. One of the consequences of the existence of decreasing returns is the possibility that poor countries catch up rich countries. According to catch-up theory, rich countries (leaders) should see their growth rates fall as a result of capital depreciation. For a given level of labour and capital factor, investment must stop so as not to create waste due to its inefficiency. We are talking about a stationary state. At this level, the country must rely on exogenous technology to trigger new growth. If so, it will simply be caught up by the poor countries (followers). In addition, poor countries are expected to experience strong growth. The growth rate of poor countries is expected to exceed that of rich countries. On the other hand, the income from this growth would follow the opposite trend, because in absolute terms, the annual GDP of rich countries remains much higher for a small variation. GDP per capita remains high while growth variation is low in rich countries. These observations are challenged by the stylised facts of Jones and Romer (2010). According to them, empirical analysis shows a heterogeneity of growth rates within rich and poor countries. They added that the level of investment in factors of production such as physical capital and labour does not guarantee immediate efficiency in production. In other words, poor countries are not only poor because they have lower levels of physical capital and labour, but also because they use their inputs less efficiently (Jones & Romer, 2010, p. 18). Result anddiscussion Figure3 compares the average growth level of different countries according to data published by the Centre for International Comparisons of the Univer- CIV SEN BEN TGO MLI BFA NER GNB USA COG CHE -0.015 -0.010 -0.005 0.000 0.005 0.010 0.015 0.020 0.025 0.030 0.035 0 1/5 2/5 3/5 4/51 1 1/5 Growth rate 1960-2000 GDP per Capita, 1960 (US=1) Fig. 3 Variation in modern growth rates for WAEMU Countries. Source: Penn World Tables 6.1 Page 15 of 20 Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 databases in order to be studied. There are many databases available and some slight differences between them. Fact 1: Increases intheextent ofthemarket The increased in the extent of the market is illustrated by the relationship between the trade and investment (internal or external). According to Jones and Romer (2010), this relation is mainly important because it enhance the flow of local ideas through Foreign Direct Investment (FDI). Foreigner invest their money but also their knowledge to implement new activities. The same argument had already been used by Romer (1992) to explained how Mauritius, a poor country has used knowledge to perform his economic development. Based on this approach, trade can be considered has a good proxy of idea. Data about trade have been collected in World Development Indicator (WDI) database 2019. Fact 2: Accelerating growth The fact 2 is more clear than fact 1 because it established a positive correlation between the population and economic growth. As population increases, the economic growth increased too. This positive correlation can be explained by the increase in the number of main power and the flows of ideas. The size of the population acts to the size of ideas produced and the sized of workers for local industries. As population fuelled economic growth, it can be considered as a factor of economic growth. Data about the population size have also been collected in the WDI database 2019. Fact 3/4: Variation inmodern growth rates/Large income andtotal factor productivity (TFP) differences These facts point out the efficiency of capital and labour. According to the both facts, capital and labour are efficient when associated with knowledge. This efficiency is mainly due to institution. A good quality of institution is better than a poor quality one. So, the institutions are acting more on capital than labour because capital can be listed and shown to populations. An investment in Gross Capital Formation (GCF) is a good indicator to justify the role and the importance of institutions. That’s why, we resort to link the index of institution to the volume of GCF as a proxy for the capital efficiency. Political stability has been used as the index of institution and associated to GCF in a multiplicative relationship. Data about the Gross Capital Formation have been collected in WDI database and data about institution have been provided by the PRS Group’s database 2019. Fact 5/6: Increases inhuman capital perworker/ Long‑run stability ofrelative wages The facts 5 and 6 are focus on the efficiency of labour force and its implication for well-being. In facts, human capital must be improved by education and health. Jones and Romer (2010) focus facts 5 and 6 on education and showed that people spend more times at school to learn. This learning improves their human capital and salaries. Education is individual before being collective because more educated you are and huge salary you received. So, education is important for workers than unemployed. In that case, the more important challenge is increase of educated people and that of teachers. That why, the ratio of pupil-teacher ratio in primary school has been associated to the size of labour force in a multiplicative relationship. Data about labour and the pupils-teacher ratio have both been collected in WDI database 2019. Page 16 of 20 Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 Econometric model The econometric model of RAO (2010) has been used to illustrated the relationships described by stylized facts. The technology of the model is that of Cobb–Douglas. The basic form of the model is: By applying the logarithm at each side of the equation, we obtain: With Yit : GDP/capita, (NK )it : Knowledge variable. Kit : Capital, Lit : Labour and C : Constant. In long term, the derived function of Eq.(2) allowed the calculation of the growth rate of each variable. The point on the variables indicates a derivative time. Knowledge variable is a set of four variables ideas, population, institution and human capital. These variables must be also approximated in order to collect data. The proxy used for ideas is trade, the proxy used for human capital are Pupil-teacher ratio in primary and the size of labour. As population, we resorted to the size of the population and finally, political stability and Gross Capital Formation has been used as proxy for institution. Equation(2) is rewritten as: With Yit : GDP/capita, (Pop)it : Population, (Ideas)it : Ideas , (Hum)it : Human Capital, (Inst)it : Government Institution, Kit : Capital, Lit : Labour and C : Constant. Results anddiscussion Among the eight countries members of WAEMU, only six have been considered: Burkina Faso, Côte d’Ivoire, Mali, Niger, Senegal and Togo. Benin and Guinea-Bissau have been missed because of lack of data. Without these both countries the model has been more significant. Pooling GLS (random) FGLS dgcf 0.0698144** 0.0698144* 0.0698144** dlabor − 2.185686*** − 2.185686*** − 2.185686*** dhum 0.0330378*** 0.0330378*** 0.0330378*** dpop 2.264817*** 2.264817*** 2.264817*** dideas 0.0134598*** 0.0134598*** 0.0134598*** dinst − 0.008562** − 0.008562* − 0.008562** cons − 0.0360827** − 0.0360827*** − 0.0360827*** *p < 0.1; **p < 0.1 and ***p < 0.05 (1) Yit =C(NK ) γ it K α it L 1−α it (2) ln Yit =ln(C)+γln(NK )it +αln Kit +(1−α)ln Lit (3) ˙ Y Y = • NK NK +α ˙ K K +β ˙ L L (2’) ln Yit =ln(C)+γ[φln(Ideas)it +ϕln(Pop)it +ηln(Hum)it +χln(Inst)it]+αln Kit +(1−α) ln Lit Page 17 of 20 Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 As result, we find that the capital, population, ideas and human capital have positives effects economic growth while labour and institution have negatives effects on economic growth. All the results are significant at 10%. There is no correlation and data are heteroscedastic. Gross Capital formation acts positively on economic growth in sub-Saharan countries (Uneze, 2013). Each investment in Gross Capital formation increased the economic growth in WAEMU. These investments are done mainly by government. The stability of government must have fuelled the investment in Gross Capital Investment. Unfortunately, it’s not the case in WAEMU. When there is government stability, the investment decreased otherwise it increased. This fact could be explained by public aids. In fact, during the crisis, international institutions gave loans to afflicted countries and reduce their debts. All the countries in WAEMU have benefit from Heavily Indebted Poor Countries (HIPC) initiative (IMF, 2014). This money has mostly been used to invest in capital formation immediately after the end of the conflicts. So, during stability, government had to pay for the debt and ceteris paribus reduce the amount for investment. Labour has a negative effect on economic growth in WAEMU. This fact is due to numerous people that work in informal sector. These activities are done just to survive and the add values created are very low. Fortunately, when we increased the number of teachers in primary school, the effect of workforce on economic growth become positive. Education at primary school can then be considered as the key to improve the efficiency of labour in WAEMU. Population acts positively on economic growth of WAEMU. This result is important because it’s means that government have to think about the right way to manage the number of population. The size of population is an opportunity to enhance economic growth because people are exchanging many knowledge that act on economic growth. One of these knowledge is the trade. Trade openness has a positive effect on economic growth (Rao, 2010) and allowed an increase of economic growth. The exchange in border and out border leads to importation of innovation and technologies from developing countries to poor countries (Romer, 1992). And it’s clear that, WAEMU benefit from trade openness. Conclusion andrecommendations Stylized facts of knowledge have been subdivided into two categories: overall growth and overall income. Each category is consistent with the standard analysis of Jones and Romer (2010). For the overall growth, it can be said that the markets in the area have expanded in line with world market trends. This expansion has led to a dynamic in economic growth that exceeds the natural growth of the population. The rate of economic growth and that of GDP per capita growth rates in the Member States is different according to each country over the period 1960–2000. This difference in growth rates is due to the difference in TFP. For overall income, we noticed that the world has seen a steady increase in income, which is an increasing linear function of TFP. It is also noted that the human capital in education used to approximate TFP allowed the explanation of the dynamic of economic growth rates and the market, but does not explain the difference between member countries. However, the stock of human capital leads to higher and stable wages in the area. Page 18 of 20 Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 Whether it is global growth or global income, the analysis showed that the economic context of the WAEMU responds favourably to a change in economic policy. So, it’s important to analyse the stylized facts on the empirical way. This fact is possible because stylized facts are established on four variables and set up some relationship between some variables. By using a proxy of ideas, population, human capital and institution, we noted that, they affect economic growth in WAEMU.Ideas act positively on economic growth (Jones, 2005) and Human capital acts positively on economic growth (Alawamleh etal., 2019);; Unfortunately, institution act negatively on economic growth in WAEMU (Acemoglu etal., 2001) and population act positively on WAEMU economic growth (Troupa etal., 2020) in contrary of expected results. The positive impoact of population can be explained by the negative impact of labor in the model. Then, government have to focus on population, capital human and ideas to improve economic growth in WAEMU beacause political instability (institutions) in WAEMU leads to a decrease in economic growth. It’s also possible to make a combination between each factors of production to have interesting results (Maradana etal., 2017; Momeni etal., 2019; Okumu etal., 2019) about the relationship between each facts. After empirical analysis; we are able to encourage governments to adopt knowledge economic in WAEMU because the standards stylized facts of Romer and Jones (2006) fits well with the results of stylized facts of WAEMU.. The promotion of knowledge would make it possible to achieve endogenous and rapid economic growth in WAEMU. This type of economic growth is a godsend because it would challenge the constraints associated with the old neoclassical growth models. This paper is an incentive to encourage the local government in WAEMU to focus on new factors of economic growth scoped by knowledge. Abbreviations BRVM Regional Stock Exchange CICUP Centre for International Comparisons of the University CIMA Inter-African Conference on Insurance Markets FDI Foreign Direct Investment GCF Gross Capital Formation GDP Gross domestic product HIPC Heavily Indebted Poor Countries IMF International Monetary Fund OHADA Organisation for the Harmonisation of Business Law in Africa PIRDU Regional Indicative Programme for Urban Development SADC Southern African Development Community TFP Total factor productivity WAEMU West African Economic and Monetary Union WDI Word Development Indicators WTO World Trade Organization Acknowledgements We acknowledge Professor Anasse Adja Augustin, Dr Youan Bi Bertrand Athanase and the Université Alassane Ouattara for the framework and the opportunity of this study. Author contributions ANAA is the main investigator. He has been at each level of the conception: brainstorming, writing, analysis and discussions. BZ is a senior lecturer. He has made a great support during the writing and the analysis and discussion of all the results. SGFT is a lecturer. He has made a great support during the data collection, the analysis and discussion of all the results. All authors read and approved the final manuscript. Funding ’Not applicable’ for that section. Page 19 of 20 Amanzouetal. Journal of Innovation and Entrepreneurship (2022) 11:47 Availability of data and materials The datasets generated and/or analysed during the current study are available in the Word Development Indicators (WDI) repository, https:// datab ank. world bank. org/ source/ worlddevel opmentindic ators. The datasets generated and/ or analysed during the current study are available in the Penn Word Tables 6.1 repository, https:// www. rug. nl/ ggdc/ produ ctivi ty/ pwt/ pwtrelea ses/ pwt-6. 1? lang= en. The datasets generated and/or analysed during the current study are available in the FMI (GFS & WEO) repository, https:// www. imf. org/ exter nal/ pubs/ ft/ weo/ 2011/ 02/ weoda ta/ WEOSe p2011 all. The datasets generated and/or analysed during the current study are available in the Word Development Indicators (WDI) repository, https:// datab ank. world bank. org/ source/ worlddevel opmentindic ators. Data are available on line: see Barro-Lee 2016 repository, http:// www. barro lee. com/. Declarations Competing interests ’Not applicable’ for that section. Received: 20 December 2020 Accepted: 21 November 2021 References Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The Colonial Origins of Comparative Development: An Empirical Investigation. The American Economic Review, 91(5), 1369–1401. Alawamleh, M., Bani Ismail, L., Aqeel, D., & Alawamleh, K. J. (2019). The bilateral relationship between human capital investment and innovation in Jordan. 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