A Comparative Study of Trade Performance between Intergovernmental Authority on Development and Other African Union Recognized Economic Communities
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Date
2014-05
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Addis Ababa University
Abstract
IGADD was established in 1986 and transformed into IGAD in 1996 with expanded mandate to include economic cooperation and integration agenda and to achieve plans set in Abuja Treaty (1991). Considering the eight regional economic communities that are officially recognized by the African Union, the objective of this study was to compare trade performance between IGAD and other African Union recognized economic communities. The study relied on secondary sources of data and employed judgmental sampling techniques. Analyses were made both at regional and country levels. Findings from descriptive analysis of aggregate and disaggregate level panel data covering 1996-2012 indicated that intra-bloc and extra-bloc trade performance of IGAD region was low compared to other African Union recognized economic communities. In addition, there existed no significant sectoral variation of exports between IGAD and other African Union recognized economic blocs. The casual analysis done using gravity model revealed that IGAD did not contribute to the creation of trade in the sense of Viner (1950). IGAD failed to meet its trade related objectives set both in the Agreement Establishing IGAD (1996) and the plans set in Abuja Treaty (1991). Internal reliability of gravity model variables was within acceptable limit. Overlapping membership, under developed trade logistics, fear of customs revenue loss, lack of political commitment and leadership, lack of trust among the member states were the major factors constraining integration process. The study suggests that real political will and leadership, being strategically selective and sequencing, improving trade logistics, strengthening implementation capacity of IGAD secretariat, encouraging and promoting the involvement of private sectors, and people-to-peoples interaction will help realize economic integration plans.
Key words: IGAD, economic integration, RECs, trade creation, Gravity model, Abuja Treaty
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Keywords
IGAD, economic integration, RECs, trade creation, Gravity model, Abuja Treaty