II. Background: Production and Trade of Manufactured Output
III. Data Description
IV. Theoretical Background of the Estimation of Total Bilateral Trade Costs
V. Estimates of Total Bilateral Trade Costs
VI. Determinants of Total Bilateral Trade Costs
VII. Robustness Checks
IX. Policy Implications
Appendix 1: Composition and trade of manufactured output
Appendix 2: List of countries and territories included in the study
Appendix 3: List of ISIC categories included in the study
Appendix 4: List of dominant suppliers by EAC country and ISIC category
Appendix 5: Summary statistics for total bilateral trade costs
Appendix 6: Further robustness checks
This paper assesses the East African Community’s (EAC) effectiveness in integrating member countries by lowering total bilateral trade costs. First, information is provided on the size and distribution of bilateral trade costs among 16 manufacturing industries over the period 1990~2012 for a sample comprising five EAC countries and 87 of their trade partners. The estimates indicate that it costs on average three times more for an EAC country to trade manufactured goods with another EAC country than to trade those goods domestically. The estimates also indicate that it costs on average eight times more for an EAC country to trade manufactured goods with a non-EAC country than to trade those goods domestically. This paper then shows the importance of natural and policy-related factors in determining the trade costs.
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