Analyzing the Determining Factors for Export-Oriented Growth Strategy in East Africa: A Comprehensive Empirical Research

Abstract

International trade mainly Exports have a substantial impact on the country’s economy, employment, and balance of payments. Despite trade policy reforms, East African nations have a limited share in global exports. The region’s trade balance has been in deficit for multiple years, and its export-driven growth remains poor. This study analyzed data from selected East African countries over a twenty-year period using a panel-autoregressive distributive lag (ARDL) econometric model. The descriptive findings show that exports have been weak with a persistent trade deficit, industrial items dominated imports while primary items were overlooked in the export basket. The results from the empirical study (pooled mean group-PMG) reveal those determining factors such as foreign direct investment, per capita gross domestic product, inflation rate, real effective exchange rate, terms of trade, and industrialization have a significant influence on export performance in the long run. Further to this, the study suggests that the exchange rate, inflation rate, and foreign direct investment inflows negatively affect the performance of exports in the region. To this end, the outcomes of the study highlight the need to revise export-oriented strategies so as to boost export and overall economic development in East Africa.