Vincent Leyaro on inter and intra industry trade effects of East Africa custom union in Tanzania

Vincent Leyaro gave a presentation on 27 May 2020, as part of the Sustainable development solutions for Tanzania – strengthening research to achieve SDGs project. The presentation was held as a webinar.

Abstract – Inter and intra industry trade effects of East Africa custom union in Tanzania: Application of structural gravity model

Using disaggregated trade statistics at 6 HS Code digits and applying Grubel-Lloyd Index (GLI), this paper assesses the effect of East Africa Community’s (EAC) Custom Union (CU) on Tanzania’s exports to its partner states.

Specifically, the paper establishes whether the focus of Tanzania’s trade pattern with its partner states has transformed over time (1997-2018) from inter-industry trade to intra-industry trade. The latter is a measure of Tanzania’s export diversification and competitiveness into the EAC markets.

The paper also assesses whether the transformation of the Tanzania’s trade pattern has enhanced Tanzania's trade volume in the EAC market. The paper finds that despite moderate increase in the intra-industry trade, particularly between Tanzania and Kenya, the trade patterns between Tanzania and its partner states in the EAC has largely remained more within inter-industry trade.

Using the augmented structural gravity model allowing for the effects of forming EAC-CU and a single custom territory, this study finds that the formation of EAC-CU and a single custom territory have significantly enhanced Tanzania's trade volume into EAC markets, and that the effects are much higher for exports than for imports. The choice of estimator also matters on the magnitude of effect as the effects on export volume is relatively larger when applying structural gravity model compared to using the standard traditional gravity model.

About the speaker

Dr Vincent Leyaro is currently a Senior Lecturer in the Department of Economics of the University of Dar es Salaam in Tanzania. He was previously an Associate Economics Affairs Officer at the United Nations Economic Commission for Africa (UNECA) in Addis Abba, Ethiopia. Dr Leyaro is also an External Research Fellow at the Centre for Research in Economic Development and International Trade (CREDIT) at the University of Nottingham, UK. He completed a PhD in Economics from the University of Nottingham in UK in 2010.  

Dr Leyaro maintains primary research interests in the areas of trade, trade policy reforms and regional integration; labour markets analysis; household survey analysis with focus on poverty and inequality; political economy with focus on state effectiveness and social protection.