Effects of Information Asymmetry and Political Governance on Total Factor Productivity in the WAEMU

Improving total productivity (TFP) is a major challenge within the West African Economic and Monetary Union (WAEMU). Despite research on the determinants of TFP in sub-Saharan Africa and other regions, certain factors that explain TFP, such as information asymmetry and governance, warrant attention in the WAEMU context. This paper analyzes the effects of information asymmetry and political governance on TFP within WAEMU. Using the Fully Modified Ordinary Least Squares estimator proposed by Pedroni (1996, 2000) on aggregate data from WAEMU countries covering the period 2003-2023, we show that information asymmetry has a direct negative effect and an indirect negative long-term effect on TFP. We also show that political governance factors, such as government stability, control of corruption, democratic accountability, socioeconomic conditions, investment profile, internal conflicts, external conflicts, and military in politics, have significant direct long-term effects on TFP in this region. We therefore suggest improving information management and the quality of political governance in the WAEMU.