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Comparing the Performance of Uganda’s Intra-East African Community Trade and Other Trading Blocs: A Gravity Model Analysis

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  • Shinyekwa, Isaac
  • Othieno, Lawrence

Abstract

This paper examines factors that determine Uganda’s trade flows and specifically compares the impact and performance of the different trade blocs on Uganda’s trade patterns and flows. The empirical question is whether Uganda’s trade is getting more integrated in the East African Community (EAC) region or is still dominated by other trading blocs, namely European Union (EU), Asia and Common Market for Eastern and Southern Africa (COMESA)? Two analytical approaches are used, namely: trade indicators and estimation of the gravity models using data extracted from COMTRADE for the period 2001 – 2009 (panel). We estimate determinants of export and import trade flows separately using static random, dynamic random and IV GMM models. The results suggest a strong relationship between belonging to a trading bloc and trade flows. Likewise, Uganda’s import and export trade flows have conspicuously adjusted to the gravitational forces of the EAC during the progress of the integration. Whereas exports are being integrated more in the EAC and COMESA regions, imports are more integrated in the Asian and EU trading blocs. Therefore, strong links with trading blocs outside the EAC (i.e. EU and Asia) with regards to imports still exist. The trade indicators demonstrate that Uganda exports largely primary products and imports manufactured products. It is imperative for Uganda to target implementation of regional trade agreements to expand the country’s export markets. The EAC region should attract investment in production of high technology products to increase intra-EAC imports and reduce imports from Asia and the EU.

Suggested Citation

  • Shinyekwa, Isaac & Othieno, Lawrence, 2013. "Comparing the Performance of Uganda’s Intra-East African Community Trade and Other Trading Blocs: A Gravity Model Analysis," Research Series 150227, Economic Policy Research Centre (EPRC).
    • Handle: RePEc:ags:eprcrs:150227
    DOI: 10.22004/ag.econ.150227
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    References listed on IDEAS

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    3. Fassil Eshetu & Degye Goshu, 2021. "Determinants of Ethiopian Coffee Exports to Its Major Trade Partners: A Dynamic Gravity Model Approach," Foreign Trade Review, , vol. 56(2), pages 185-196, May.
    4. Shinyekwa, Isaac, 2013. "Economic and Social Upgrading in the Mobile Telecommunications Industry: The Case MTN Uganda," Research Series 159671, Economic Policy Research Centre (EPRC).
    5. Lakuma, Corti Paul & Sserunjogi, Brian, 2018. "The Value Added Tax (VAT) analysis for Uganda," Research Series 280622, Economic Policy Research Centre (EPRC).
    6. Cosmas S. Mbogela, 2018. "Determinants of Africa - BRIC Countries Bilateral Trade Flows," Economy, Asian Online Journal Publishing Group, vol. 5(1), pages 40-53.
    7. Ahaibwe, Gemma & Mbowa, Swaibu & Lwanga, Musa Mayanja, 2013. "Youth Engagement in Agriculture in Uganda: Challenges and Prospects," Research Series 159673, Economic Policy Research Centre (EPRC).

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