Quality of life, economic growth, and income inequality among West African states

Abstract

Most West African countries have experienced economic growth in recent years, yet the effect on quality of life of the citizens is not being felt. The study therefore seeks to examine the effect of economic growth on quality of life and the role income inequality plays in this relationship. To achieve this, the study aims at examining the linkage between economic growth and quality of life among West Africa countries. It also seeks to determine the role income inequality plays in the linkage between quality of life and economic growth and finally, examine other macroeconomic variables that significantly affect quality of life in West Africa. A panel data of all the 15 West African countries were obtained from International Financial Statistics and World Development Indicators. Using Auto Regressive Distributed Lag model, the study finds that economic growth has a significant positive effect on quality of life. Also, income inequality does not moderate the linkage between economic growth and quality of life. However, variables such as interest rate and exchange rate have significant negative effect on quality of life whiles Foreign Direct Investment significantly influence quality of life positively. The study recommends that, government should invest in the productive sectors of the economy to boost economic growth. Also, government should strike a balance between limiting inflation, supporting economic growth, and maintaining access to affordable credit to help vulnerable people.