Trade Facilitation and Intra-regional Trade: the Case of East African Community (2007-2017)

Abstract

This paper seeks to analyze the effect of Trade Facilitation on Intraregional Trade in the East African Community. Trade Facilitation in this case is captured by Logistics Performance Index, developed by the World Bank. The Index among other factors captures efficiency in customs clearance, logistics and infrastructure with respect to a specific country. Bilateral trade among the EAC partner states, namely Kenya, Uganda, Burundi, Rwanda and Tanzania is considered using the Augmented Gravity Model as the theoretical framework. The model makes the assumption that bilateral trade is explained by the economic size of the two countries, distance between the countries and other factors such as trade costs. The outcomes indicate that indeed the relationship between growth in intraregional trade and trade facilitation measures is positive and statistically significant.