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The Determinant of Bilateral Trade in the East African Community: Application of the Gravity Model

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  • Ambetsa Wycliffe Oparanya
  • Kenneth P. Mdadila
  • Longinus K. Rutasitara

Abstract

This study examines the determinants of bilateral trade flows within the East African region using the Gravity model approach. Using a 40 year data obtained from the World Development Institute¡¯s data base, the Random Effects model is applied to empirically determine the variables that drive bilateral trade within the region. The findings suggest that country size, contiguity, diaspora remittances and corruption index have a positive impact on the regions bilateral trade. On the other hand, foreign direct investment flows, net population effects and mobile subscription ratio have a negative impact on intra-trade flows among member states. Although not exhaustive, the study offers useful insights for policy makers to seek measures to spur the EAC intra-trade flows.

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  • Ambetsa Wycliffe Oparanya & Kenneth P. Mdadila & Longinus K. Rutasitara, 2019. "The Determinant of Bilateral Trade in the East African Community: Application of the Gravity Model," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(4), pages 1-15, April.
    • Handle: RePEc:ibn:ijefaa:v:11:y:2019:i:4:p:1-15
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    More about this item

    Keywords

    determinants; bilateral trade; gravity model; Intra -trade flows;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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