Nexus of Trade and Industrial Sector on Human Capital Development in Selected ECOWAS Countries

This study investigates the nexus of trade openness and industrial sector on human capital development in Nigeria, Côte d’Ivoire, and Togo over the period 1994 to 2023. This study examines the relationship between trade openness, industrial sector, and human capital development in the selected West African countries using a quantitative panel data method. Variables of the study include Human Capital Index (HCI) as the dependent variable while Trade Openness (% of GDP), Industrial share (% of GDP) and Interaction term between Trade Openness and Industrial Value Added as independent variables. The study utilized data from the World Bank’s World Development Indicators and relevant country statistical agencies. The findings shows that trade openness (β = 0.0042), and industrial sector (β = 0.0060 individually contribute positively to human capital development. However, the significant negative interaction result between trade openness and industrial share (-.00009) indicates that the benefits of trade openness on human capital diminish as the industrial sector grows larger. Based on the findings, this study recommends that policymakers should design trade and industrial policies that complement rather than substitute each other. Furthermore, to mitigate the negative interaction effect, targeted investments in skill development aligned with industrial diversification can enhance the absorptive capacity of the workforce and ensure more inclusive human capital benefits from trade.