Determinants of export growth in east african countries: a panel data analysis

Abstract

The paper examines the effect of demand and supply side factors on the export performance of East Africa countries. Mainly, the study focuses on analyzing the relative importance of the two major factors in determining East African countries’ export performance. The study employed balanced Panel data set using random effect estimation techniques in order to address the question. The data covers a period of 15 years (2000 to 2015) for nine East African countries. The random effect model estimation result indicates that the supply side factors such as GDP of exporting countries, and trade openness affect positively and significantly the export performance of East African countries. While foreign direct investment and average institutional development found to be insignificant for the export development of the region. The study also indicates that all demand side factor such as membership to world trade organization dummy (WTO) and real exchange rate except average income of major importing countries have significant contribution to the export performance of East African countries. Generally, the result indicates that both the supply and demand side factors equally important in determining the export performance of East African countries. Based on this among others things, East African counties should eliminate or at least minimize import and export duties, devaluate their currency, membership to WTO, creating conducive environment for GDP growth so as to improve their export performance.