Market structure in regional integration: analysis Of the Kenyan sugar industry in COMESA
Abstract
The study analysed intra - industry trade in sugar within COMESA and also
evaluated the market with regard to distribution of production share. Theoretical
foundations contend that intra - industry trade normally takes place when
countries are similar in their relative factor supplies and therefore comparative
advantage cannot be used to explain its occurrence. We infer the homogeneity of
white sugar from the value of the Grubel - Lloyd index calculated to be 0.71 for
the period 1995-2000 thus argue that there is no further basis for trade in this
industry and since it does exist, we evaluated the structure of the market for
sugar. This we did noting that there has been an increase in sugar imports to
Kenya since the trade related provisions of COMESA came into effect. The bulk
of this increase has been from COMESA-member countries. This increase has
been perceived as unfair yet it has not been explained properly. This study
estimated intra sugar-industry trade and further, the structure of the market
proxied by production levels of selected COMESA countries against their number
of sugar-producing firms for the single year 2000. It emerged that there is
unequal production share distribution thus imperfect competition, the level of
which, as evident from the Gini coefficient of 0.23, is low. Working out an
equitable production share distribution of member countries in line with their
respective number of sugar firms will reduce the disparity existing currently.
Sponsorhip
The University of NairobiPublisher
Department of Economics