Has the East African Community Regional Trade Agreement Created or Diverted Trade? A Gravity Model Analysis

Shinyekwa, Isaac

doi:10.5539/jsd.v8n9p129

Cited by 6 publications

(6 citation statements)

References 23 publications

(22 reference statements)

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“…This suggests that the efforts put in place to facilitate trade in the COMESA region are bearing results of integrating the markets. This is in agreement with the results of other studies (see, for example, Krugman, ; Wanjala, ; Buigut, ; Shinyekwa and Othieno, ) that have argued that regional integration creates large markets and promotes regional trade among partners.…”

Section: Estimation Results and Discussionsupporting

confidence: 93%

“…First are studies that show a positive link between COMESA and trade creation. Shinyekwa and Othieno () and Wanjala () suggest that COMESA has the effect of trade creation, while no evidence for trade diversion is found. Musila () found that the intensity of trade creation or diversion varies from region to region and from period to period.…”

Section: Review Of the Literaturementioning

confidence: 99%

See 1 more Smart Citation

The Effects of Regional Economic Communities on Industrialization: The Case of COMESA

Shinyekwa¹,

Lakuma²,

Munu³

2019

African Development Review

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This paper seeks to establish the contribution of the Common Market for Eastern and Southern Africa (COMESA) programmes in promoting industrialization. It further seeks to establish the link between industrialization and productivity. The paper uses a gravity model to estimate a cross-sectional time-series (panel) dataset for the period 2001-2015.The results indicate that membership to COMESA has created large markets and promoted industrialization among member states. However, results also confirm that COMESA member states still heavily trade in industrial intermediates with nonmembers. The study further reveals that the share of foreign total factor productivity (TFP) to COMESA's TFP are weaker than expected, which suggests non-convergence to international knowledge spillovers. The study concludes that COMESA programmes have positively affected industrialization. We therefore recommend that COMESA should continue implementing strategies, policies and programmes that promote industrialization and technology transfer.

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Section: Estimation Results and Discussionsupporting

confidence: 93%

Section: Review Of the Literaturementioning

confidence: 99%

The Effects of Regional Economic Communities on Industrialization: The Case of COMESA

Shinyekwa¹,

Lakuma²,

Munu³

2019

African Development Review

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“…The results of this study are similar to the study conducted by Gebreyesus and Bahre (2015), Shinyekwa and Lawrence (2013) and Wondesen and Fekadu (2019). But, the population size of partner countries is negatively and statistically significantly affecting the export volume of Ethiopian coffee at 10% significant level.…”

Section: Resultssupporting

confidence: 92%

Determinants of Ethiopian Coffee Exports to Its Major Trade Partners: A Dynamic Gravity Model Approach

Eshetu

Goshu

2021

Foreign Trade Review

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The aim of this article is to examine export determinants of Ethiopian coffee to 31 trade partner countries using a dynamic gravity model and system generalised moment method of estimation (GMM) for the period 1998–2016. Descriptive results showed that Ethiopia was exporting only 39% of its total coffee production, and 53.5% and 34.13% of Ethiopian coffee exports were directed to European and Asian countries, respectively, over the period 1998–2016. Regression results revealed that trade openness, population size of Ethiopia, foreign direct investment and institutional quality index of Ethiopia are positively and significantly affecting volume of Ethiopian coffee export. But population of partner countries, weighted distance, lagged export volume and real exchange rate are negatively and significantly influencing export volume of Ethiopian coffee. Hence, Ethiopia needs to diversify its export destinations and export items a way from primary agricultural exports to secondary industrial exports in order to secure dependable source of foreign currency. Also, controlling corruption, increasing government effectiveness, ensuring political stability promotion of foreign direct investment and encouraging trade liberalisation would help to boost the volume of Ethiopian coffee export. JEL Codes: F12, F13, F14

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“…Overall, the results suggest that the effects of the Customs Union has been important in the restructuring of intra-EAC trade but much less so in terms of total trade and deep integration. Shinyekwa (2015), using an expanded gravity model and a panel data set ranging from 2001 to 2011, investigated the potential impact of the EAC Treaty on trade creation and diversion. His results suggest that the implementation of the EAC Treaty has indeed created trade, contrary to widely held views that South-South regional integration largely diverted trade.…”

Section: Regional Integration and Bilateral Trade Flowsmentioning

confidence: 99%

“…In 2016, he looked again at the overall trade effects of the EAC-CU on intra-EAC trade for the period from 2000 to 2013 and found that the EAC-CU had a moderate positive effect, increasing intra-EAC trade by 22.1 per cent (Buigut 2016). Shinyekwa (2015) estimated the impact of the EAC-CU for the period 2001 to 2011 on trade creation and diversion and found that the formation of the Customs Union had created trade contrary to the widely held view that it had diverted trade. Mayer and Thoenig (2016) found, among other things, a positive and statistically significant effect of the EAC agreement in promoting bilateral trade between its members of up to 121 per cent.…”

Section: Estimated Trade Cost Parameters For Tanzanian Exportsmentioning

confidence: 99%

Trade effects of the East Africa Customs Union in Tanzania: Application of a structural gravity model

Leyaro¹

2021

WIDER Working Paper

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By measuring the effects of forming and joining a regional integration bloc using an augmented structural gravity model, this paper finds that the East African Community (EAC) and EAC Customs Union have significantly enhanced Tanzanian trade into EAC markets. Kenya has continued to be the main trading partner for Tanzania in the EAC markets, and from 2015 onwards the trade deficit with Kenya changed into a surplus, signalling improvement in the balance of trade. Tanzania has also maintained a significant trade balance surplus with the other EAC Partner States. There have, however, been no significant changes in Tanzania’s trade patterns, which have remained primarily inter-industry rather than intra-industry, signalling a lack of structural change and productivity in the economy and suggesting that Tanzania’s trade in EAC markets is not linked with industrialization and transformation. Furthermore, continued trade imbalances, especially with Kenya, threaten a backlash in the long term and are not healthy for the future and sustainability of the EAC integration process.

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Has the East African Community Regional Trade Agreement Created or Diverted Trade? A Gravity Model Analysis

Cited by 6 publications

References 23 publications

The Effects of Regional Economic Communities on Industrialization: The Case of COMESA

The Effects of Regional Economic Communities on Industrialization: The Case of COMESA

Determinants of Ethiopian Coffee Exports to Its Major Trade Partners: A Dynamic Gravity Model Approach

Trade effects of the East Africa Customs Union in Tanzania: Application of a structural gravity model

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