Economic Impact of the Common Market for Eastern and Southern Africa (COMESA) on Member and Non-Member Countries: A Structural Gravity Analysis

Abstract

This study uses a general equilibrium Poisson pseudo-maximum likelihood (GEPPML) estimator to evaluate the economic impact of COMESA on its member and non-member countries. By analyzing cross-sectional data from 2018, the study evaluates the economic impacts of COMESA, specifically on total exports and real GDP growth of countries. The results confirm that COMESA positively influences both total exports and real GDP growth within member countries. It led to an average increase in real GDP by 0.406% and total exports by 0.185% for member states within the full endowment's general equilibrium effects. Globally, the impact is minimal, though some non-member countries experience a slight loss due to trade diversion. These findings highlight the critical role of regional trade agreements like COMESA in enhancing total exports and welfare among member countries while also acknowledging potential adverse effects on non-member countries. This study provides key insights for policymakers to strengthen regional integration by considering its consequences for non-member countries.