Industrial market structure and development in East Africa
Abstract
This study examines how industrial market structure
plays its role in the process of development of the three
East African economies Kenya, Uganda and Tanzania. It
provides an examination of the results of studies on market
structure in MDC as applied to LDC. There has been continued
technological dependency relationship between the less developed
and. the developed countries. The developing countries have
continued to import technologies and production techniques
which have been tested under the conditions in the developed
countries which are different from those which ace found in
the developing countries. This has resulted in market structures
which have exhibited very high frequency of monopoly and
oligopoly.
This study utilities an analytical model which looks fit
the relationship between performance of industries and market
structure. In our analysis we assume linear relationship
between performance which we have measured by price-cost margin
and market structure which is represented by four structural
.variables (1) Seller concentration (2) Barriers to entry
(3) Import domestic sales ratio and (4) Proportion of output
exported. We have hypothesized that concentration and barriers
to entry are positively related to price cost margins and
import domestic sales ratio and export output ratio are
negatively related to price-cost margin. The analysis is
done on the whole manufacturing sectors for the three countries
and on these sectors divided into two categories - (1) Those
industries which process farm out put and (2) Those which do not.
Monopoly power in the less developed countries markets
does not appear to be directly reflected in the straight
forward measurable features like concentration and barriers
to entry. These two do not show any significant relationship
with per performance , The expected direct relationship between
these two features and performance has been mitigated by
protection and price control, relationship between concentration
and wage levels, and other indirect characteristics in LOC
markets (e.g. over invoicing) which make it difficult to evaluate
performance. These are the features to which policy should be
directed. The external features of market structure Show that
their role is also important - import variable continues to
show the commonly reached result of negative relationship
with performance which calls for import substitution (There
are a few occasions in the study "hen this is not supported).
A curious result is shown in the negative relationship between
performance and exports variable. This result does not suggest
that He should not continue to export and expand our export
potential but that we must try and reduce exportation costs to
the economy so that exports may show overall benefits to
the economy
Citation
Master of Arts in the University of Nairobi,1975Publisher
University of Nairobi Faculty of Arts, university of Nairobi