Discussion Paper No. 132 of 2012 on Is the East African Community Inducing Growth?

Abstract

This study investigates the effects of integration process, trade and foreign direct investment (FDI) on economic growth of East African Community (EAC) member countries. Using a panel data and a single equation model, the study uses generalized least square technique (GLS) to estimate the relationship. The results obtained show that trade within the EAC has no significant impact on the economic growth of these countries. However, the EAC trade with the rest of the World and FDIs have a significant effect on the growth of EAC member countries. The study therefore suggests that for the EAC member countries to benefit fully from the integration process, they need to streamline their custom clearance procedures and standards; establish a single custom territory and harmonize national laws that contradict the common market protocol...