Growth and economic integration: Evidence from the Eastern and Southern Africa trade blocks

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University of Dar es Salaam
This study examines the impact of economic integration on growth by constructing an economic integration index based on average Most Favoured Nations (MFN) tariffs and the level of regional integration for the three trade blocs of Eastern and Southern Africa, namely COMESA, EAC and SADC. Furthermore, the study confirms this relationship using an intra-regional trade intensity index for each of these trade blocs. Based on extreme bounds analysis (EBA) and drawing on the neoclassical and endogenous growth theories, robust conditioning variables for economic growth are identified. System GMM estimation technique for panel data is employed which eliminates: the inconsistencies arising from omitted variables; measurement errors; endogeneity bias; unit root effects in the choice of instruments; and attenuates effects of differencing that pl ague most of the empirical work in the literature . The study finds that economic integration and trade, separately and jointly , have a positive and significant impact on growth . The study concludes that regional integration that is not accompanied by open trade policies with the rest of the world has the potential to undermine economic performance of integrating economies. The study recommends among other policies, pursuance of non-discriminatory trade liberalization concomitantly with preferential liberalization measures in both goods and services, if economic integration is to have a significant and sustained positive impact on growth.
Available in printed form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HC860.N56)
Economic integration, Africa, Eastern, Africa, Southern
Njoroge, L.K (2008) Growth and economic integration: Evidence from the Eastern and Southern Africa trade blocks.Doctoral dissertation, University of Dar es Salaam, Dar es Salaam.