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Trade Effects of the East African Community Customs Union: Hype Versus Reality
Author(s) -
Buigut Steven
Publication year - 2016
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12133
Subject(s) - endogeneity , robustness (evolution) , gravity model of trade , economics , estimation , gravity equation , customs union , international economics , international trade , econometrics , bilateral trade , geography , biology , biochemistry , management , archaeology , gene , china
This study uses a theoretically consistent gravity model to assess the average trade effect of the East African Community customs union implemented in 2005. The estimation is carried out using a framework that controls for endogeneity. Country‐pair fixed effects are included to control for time constant factors while importer‐year and exporter‐year fixed effects account for time varying multilateral resistance variables. To check for robustness a Poisson pseudo‐maximum likelihood estimation is used. The study covers the period 2000 to 2013 with a total of forty nine trading partners. The results suggest that the EAC customs union has produced a moderate positive effect on intra‐EAC trade of about 22.1%.