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The nexus between the terms of trade and marginal propensity to import and the consequent policy options arising from it among economic blocs is an area that has not been given due attention in the literature. The focus of the current paper is to examine the link between the marginal propensity to import and the terms of trade in the East African Community (EAC).

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The controversy surrounding the actual impact of institutional quality and economic openness on economic growth is among the motivating factors for this study. The study seeks to investigate this relationship in the Economic Community of West African States (ECOWAS) by using the panel autoregressive distributed lag (ARDL) test with annual series covering the period from 2000 to 2020. Findings indicate that in the short-run, regulatory quality and FDI outflows had an adverse impact on the economic performance of the ECOWAS bloc. Furthermore, the long-run results show that trade openness, political stability and FDI outflows had an adverse impact on the economy of the bloc, while regulatory quality positively affected the economy. Consequently, the paper recommends that member countries in the ECOWAS bloc should put in place effective regulatory framework in the short and medium term to attract FDI inflows, while building a strong and stable political environment in the long term. [ABSTRACT FROM AUTHOR]