Global Trade Flows and Economic Growth: Insights from East Africa Region

Abstract

This research investigates the link between global trade flows and economic growth in the East African region, utilising panel data from 2000 to 2022. Employing robust econometric methods, the analysis considers the impacts of exports, imports, capital, labour, technology, and regional international agreements (RIAs). Findings reveal that exports have a negative and insignificant impact on economic growth, suggesting ineffective current export strategies. In contrast, imports positively and significantly influence economic growth, highlighting their role in driving economic activities. Capital, labour, and technology also exhibit positive and significant coefficients, underscoring their importance. Surprisingly, the RIA dummy variable and its interaction with exports show negative signs, indicating that current regional trade agreements may not yield the intended economic benefits. The study suggests that East African countries should diversify their economies, reconsider trade policies, and create a balanced trade strategy to maximize imports' benefits, improve exports' efficiency, and reevaluate RIAs' structure and implementation.

Keywords: Economic growth; Global Trade Flows; RIA; East Africa Countries