Factors Influencing the Value of Intra-Regional Trade: A Case of Kenya’s East African Community Exports
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Date
2018
Authors
Esnas, Kidambale
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Publisher
KESRA/JKUAT - Unpublished research project
Abstract
The main objective of this research was to establish the factors influencing intra-regional trade in the EAC. The study used descriptive research design. The sample size of the study constituted four EAC countries. Data for the study was obtained from various sources such as the world bank, EAC secretariat, northern corridor authority. The results from the regression analysis indicated that only 90.3 percent of variations on the value of trade (Kenya’s EAC exports) could be attributed to determinants such as Value Added Tax, transport cost, trucking time, number of licenses, permits, and border charges while 9.7% could be attributed to other factors not in the study. This implies that effective management of determinants such as Value Added Tax, transport cost, trucking time, number of licenses and permits, can be implemented to improve levels of trade in the EAC. Multiple correlation analysis was performed with each of the unique models to examine the significance of relationship amongst the various independent variables and the dependent variable. All the variables were incorporated in one model, multiple correlations co-efficient was observed. The raw data obtained from the various reports under study were analyzed using SPSS spreadsheets after which regression analysis was performed. Regression found that VAT had a minimal relationship with the value of trade in the EAC as the rate has been fairly constant over the years under study. The findings from the study confirmed that transport infrastructure has a huge impact on the value of goods traded, an increase in transport costs significantly reduces the value of goods traded. Non- tariff barriers had varying degrees of relationship with the value of trade in the EAC. This study therefore recommended that the EAC countries should employ strategies to harmonize and possibly eliminate all internal tariff, improve transport infrastructure as it significantly affects the value of goods traded in the region. Eliminate non-tariff barriers and strengthen the EAC non-tariff barrier monitoring committee to enable it carry out its mandate effectively. This will deter member countries of the EAC from rampantly coming up with trade hampering policies and measures.
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Keywords
Intra-Regional Trade, East African Community