Is Intraregional Trade an Opportunity for Industrial Upgrading in East Africa?

Regional trade or regional integration is becoming increasingly important. According to Milberg et al (2013), in the post-Washington Consensus world of today, regional trade and integration are promoted not only to expand markets but also to create regional production networks, especially in the electronics sector of East Asia and the apparel industry of Southern Africa. However, intraregional trade in Africa is limited relative to extraregional trade, especially when compared to Asia, North America and Europe, where intraregional trade volume in intermediate goods exceeds extraregional trade. Intraregional trade in intermediate goods in Africa is just one third of the extraregional trade (Ahmed & Primi, 2017, p. 78). So it is fair to say that thus far African nations have missed the opportunity to enhance value addition in production through intraregional trade. From this point of view, this paper analyzes both intra- and extra-regional trade in Africa, focusing on East Africa, to determine whether intraregional trade can serve as an opportunity not only to bolster broad-based industrial development but critically to upgrade the value added of East African industrial products. For this paper, industrial upgrading refers to the process of industrial improvement on the value chain, from the production of low-value goods to higher value-added products or services.