A gravity model of east african trade flows and/or openness determinants : a panel analysis, pp. 71-101,
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Date
2009-05
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UB, Cahiers du CURDES
Abstract
This study gauged the East African Community intra-trade Flows and Openness determinants. We've first of all obviously brought light on how the countries within the EAC trade less amongst themselves tl:an what they do with out-of-block trading partners. Moreover, we found their external trade to be highly exposed to world shocks as they have a high dependency parameter. We also found that, in the EAC, trade openness is mainly determined by domestic population, the prices index and the school enrolment rate. It has also beer. found that the Random effects is the best way to model the trade openness function within the EAC and this result implies that trade openness behaviour is not remarkably different from each other.
Using a gravity model of intra block bilateral trade, we found that economic performance and population size are critically important determinants. Moreover, the distance variable revealed to be stathtically important in influencing the trade patterns within the EAC. Thus, infrastructure development and production growth are critical for the EAC common market to be a success. Countries in the EAC should produce more and let their people get closer trading relationship in order to benefit the awaited welfare effects for their respective population. The gravity modelling was found sustainable for the intra-block trade within the EAC.
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NDEREYAHAGA Richard, A gravity model of east african trade flows and/or openness determinants : a panel analysis, pp. 71-101, Cahiers du CURDES n° 10, Mai 2009.