Tag Archives: Regional Integration

The Effect of Regional Integration on Private Investment in East African Community (Published)

Using annual data from 1980-2014, this paper employs a random effect model to estimate the effect of regional integration on private investment in East African Community (EAC). Levin-Lin-Chu Test (LLC) and Pedroni Cointegration Test were used to investigate the properties of data with respect to unit root and cointegration respectively while the Hausman Test was used to select the random model. The error correction model was used to capture the short-run dynamics in the model. The findings suggest that regional integration (proxied by intra-EAC openness), has a positive significant effect on private investment in the EAC. Hence the respective EAC governments should sustain policies that promote free trade so as to boost private investment in the region through the removal  of tariffs which leads to efficiency in production and hence economies of scale.

Keywords: East African Community, Error Correction Model, Panel Data, Private investment, Regional Integration

One Belt One Road Initiative: Asia Perspective (Published)

The inception of the One Belt One Road initiative and associated programs have attracted significant attention from around the world to the not just the Asian growth story in the new century but to the growing influence of China as an inductor of a new global world order. Amidst this, there is also a brewing discussion about the impact of these developments on India and the interplay between India and China in the following decades in the context of trade and geopolitics. The One Belt One Road initiative has been conceptualized as a new age institution that can effectively promote trade and development in the 21st Century, and the rise of Asian economies and the growth of China and India, among other nations, indicate an impending shift in the global power balance. This paper analyzes these developments from an Indian perspective in the context of Sino-Indian relations and the future of the Asian regional relations, and argues that for sustainable and harmonious development in the new century, India and China should enter their golden age of unrealized and unfulfilled cooperation.

Keywords: Asia, Economy, One Belt One Road, Regional Integration, Sino-Indian Relations

Export Product and Market Diversification and Its Implications on the Performance of Eritrea’s Foreign Trade (Published)

Low level of export product diversification and high market concentration are characteristic features of the export sector of many Sub Saharan African (SSA) countries. This situation coupled with limited intra African trade has contributed to deficits in trade balance and overall poor foreign trade performance which has been of concern to policy makers in these countries. In January 2012, the African Union (AU) Summit of African Heads of State and Government endorsed the theme of ‘Boosting Intra-African trade‘ and called on Member States, Regional Economic Communities (RECs) and the AU Commission to promote industrial development with a view to diversify economies and moving away from heavy reliance on traditional primary commodities for export. As the result, efforts have been made by many African countries to diversify exports along intensive or extensive margin. The intensive margin is related with expansion focussed more on current export products, while the extensive margin deals with creating new export products or new markets. In this paper data from Ministry of Trade and Industry (MOTI) on value of exports and imports of Eritrea for the period 2000 to 2015 are used to analyze Eritrea’s foreign trade performance and the trends in trade balance. Value of Eritrean exports by commodity group and destinations for 2000, 2003, 2009 and 2014 are used to compute Normalized Harfindahl-Hirshman Index (NHHI) of export product and market diversification in COMESA region and the rest of the world. The results show, for markets, the NHHI was 0.199 in 2000, 0.123 in 2003, 0.601 in 2009 and 0.354 in 2014 indicating high market concentration of exports in 2009 compared to the other years. For products, the NHHI was 0.169 in 2009 and 0.89 in 2014 indicating high export product concentration index in 2014 explained by the dominance of new export products from the mining sector namely copper ores and concentrates, gold compounds and silver ores and concentrates. This shows that Eritrea has not made any significant breakthrough in export diversification and is yet to diversify into the higher value added activities. Above all, export sector performance has been low and the study suggests that appropriate trade policy and strategy is needed to enhance regional and global trade, expand export markets and diversify its export products through value addition and further processing of domestic and foreign raw materials

Keywords: Eritrea, Export, Market Concentration, Product Diversification, Regional Integration

African Trading Blocs and Economic Growth: A Critical Review of the Literature (Published)

There is general consensus among scholars, policy makers, and political leaders that the best way for African countries to develop is through regional trade. Regional integration and trading blocs have been suggested as ways that African nations can use to achieve sustained development and increase their participation in the global economy. Therefore, there is a need to evaluate the interrelationship between African trading blocs and economic growth of the African continent. This paper analyzes this link using theoretical and empirical literature reviews. The key findings are that intra-Africa trade is still low, despite the existence of numerous trading blocs, and that few of these contribute to regional trade creation. Poverty rates are still high and GDP does not seem to be positively influenced by the trading blocs. Many social, economic, and political challenges also weaken African trading blocs and their ability to promote integration and trade. Addressing these hindrances would strengthen the continent’s trading blocs and enhance their positive impact on intra-African trade and economic growth.

Keywords: African Trading Blocs, International Trade, Regional Integration, economic growth