Regional Economic Integration and Exports Performance in the COMESA Region (1980-2012)

Abstract

Abstract:One of the major development challenges facing Africa has been the small and fragmented economies with low incomes and low level of intra-regional exports. In an effort to promote intra-regional exports, Africa has witnessed renewed momentum for regional integration. This study examines the effect of regional economic integration on exports in the COMESA region. It employs the fixed effects regression, random effects regression and instrumental variables GMM regression to estimate an augmented trade gravity model using panel data from 1980 to 2012. The study results show that the formation of COMESA trading bloc has promoted intra-regional exports, implying intra-COMESA export bias. Comparing pre-COMESA (1980-1993 and post-COMESA (1994-2012) periods, it was found that intra-COMESA exports have grown by approximately 35 percent since COMESA was formed. This suggests that in order to enhance export flows in the region, the process of economic integration should be deepened. Thus, there is need for increased investment in transport infrastructure that will reduce long distance cost of doing business. This would have a major impact on deepening integration of COMESA economies.

The Effect of Internet Development on Indonesia’s Agri-Food Export Potential in the Global Market

“…Following these results, economic conditions emerged as an essential factor in determining the potential value of destination countries. It was due to the fact that some countries with high potential value also had high GDP, as highlighted by the results of Karamuriro (2015). This study revealed that countries with higher GDPs could trade more than those with lower GDPs because of their advantages in innovation and trade facilitation.…”

Regional Integration and Trade: The Case of the Common Market for Eastern and Southern Africa (COMESA) Free Trade Area

“…A negative Linder term in the export model implies that inter-industry trade prevails, and, as such, members export less within the bloc. According to trade theory and consistent with Karamuriro (2015), COMESA members are exporting based on their comparative advantages. Moreover, their similar factor endowments and demand structures suggest that the direction of their exports should be skewed toward outside, rather than within the bloc.…”

“…The empirical evidence on the role of FTAs or Regional Integration Agreements (RIAs) on trade is mixed. Some studies, such as Mervel and Karingi (2012), Amuli (2014), Karamuriro (2015), and Touitou (2016), substantiated the claim that FTAs and RIAs create trade. Other studies, including Muhammad and Yucer (2009) and Wengawenga and Ferdaous (2014), found little evidence or completely failed to find support for the claim that FTAs and RIAs bolster trade.…”

“…Overall, there is evidence of an average increase in trade volume within COMESA since the establishment of the FTA in 2000 ( Figure 1) (Karamuriro, 2015). While it is clear that the RIA (COMESA) or the FTA or CU promoted trade, the extent to which they improved trade in the region remains ambiguous.…”