Enhancing export competitiveness by deeper integration: The case of the East African Community

Abstract

AbstractMotivationMany African countries experience persistent trade deficits and are in need of better export strategy. While the East African Community (EAC) performs best in regional integration among the Regional Economic Communities of Africa, it is important to formulate a comprehensive export strategy that harnesses the benefits of deeper regional integration.PurposeThis article analyses the productive capabilities of the five Partner States of the EAC to investigate the potential benefits of greater economic integration. It identifies products that have potential to boost economic development and suggests a regional export strategy.Approach and MethodsThe product space framework is used to analyse national productive capabilities. In particular, the trade‐off between the potential benefit of developing a complex product and the difficulty to do so is considered.FindingsDeeper regional integration in the EAC would create opportunities to develop new products and to enhance the competitiveness of existing industries. The bloc could produce more diverse and more sophisticated products. Specifically, the analysis highlights the potential of agro‐processing and chemicals, which is generally in line with the strategic regional industries stated in the EAC Industrialisation Strategy 2012–2032.Policy ImplicationsDeeper regional integration can help develop products. EAC countries should strengthen co‐operation and leverage their expertise to develop products in clusters of related goods, rather than adopting a scattershot approach, thereby reaping economies of scale.