Estimation of the East African Community's trade benefits from promoting intra‐regional trade

Abstract

In the literature on economic integration, the optimum currency area (OCA) theory says that there should be a high degree of trade between potential members of a monetary union for them to benefit from the use of a single currency. This study uses an augmented gravity model of trade to estimate the East African Community's (EAC) trade effects, as this community decided to participate in a monetary union by 2024. The study uses the fixed effect filter (FEF) estimator, which follows a two‐step approach and outperforms the standard fixed effects (FE) estimator. The results indicate that EAC has the potential to increase trade among partner states by 122% more than expected from the normal trade levels. The study, therefore, supports the ongoing East African Monetary Union process. However, to improve the likelihood of creating a more sustainable monetary union, the study recommends these countries to primarily focus on the full implementation of the customs union and common market steps. The main contribution of this study is that it provides robust estimates of the EAC's effects on intra‐regional trade using more recent data and updated econometric techniques.

A social network analysis of the structure and evolution of intra‐African trade

“…These recognised factors can be divided into two categories, that is, attributes and distances. Among destination attributes, GDP as the proxy of economic mass is almost unanimously accepted as a significant factor affecting bilateral trade flows (Garlaschelli & Loffredo, 2005; Umulisa, 2020). The importance of other attributes closely related to the economic and social development of a host country, such as population and exchange rate, has also been highlighted (Wang et al, 2019).…”

The causal relationship between corruption and irresponsible behavior in the time of COVID‐19: Evidence from Tunisia

“…On the other hand, the African Continental Free Trade Area that has recently been launched may constitute breathing space for Tunisian exports, if well harnessed. That is why the focus should be on further consolidating and diversifying trading partnerships with African economies to benefit from the economic spinoffs generated by the regional trade agreements (Kayizzi‐Mugerwa et al, 2014; Makochekanwa, 2014; Shinyekwa et al, 2019; Umulisa, 2020).…”

Convergence institutionnelle et commerce bilatéral en Afrique centrale

“…Ils montrent également que l'ouverture simultanée à la mer, le partage d'une langue, d'une frontière terrestre et d'un même colonisateur sont favorables à l'accroissement des échanges. Il en ressort également à la suite d'Umulisa (2020) que l'appartenance simultanée des pays à la CEEAC est un facteur de leur intégration par le marché. Enfin, contrairement à la CAE (respectivement à l'ALENA) le commerce bilatéral de la CEEAC avec les autres blocs d'intégration a tendance à diminuer (respectivement à augmenter) globalement.…”

“…Les index de concordance calculés sont intégrés dans un modèle de gravité théoriquement fondé selon Anderson et van Wincoop (2003) et inspiré des développements récents de Head et Mayer (2014). C'est un modèle qui continue de s'imposer comme un outil robuste de modélisation des flux commerciaux dans le monde et même en contexte africain (Afesorgbor, 2019;Osabuohien, Efobi, Odebiyi, Fayomi, et Salami, 2019;Umulisa, 2020). Dans sa version log-linéaire augmentée des index de concordance des indicateurs de gouvernance et des autres variables de contrôle, le modèle se note:…”