Effect of East African Regional Integration on Intra-regional Trade: A Case of Uganda 1999 - 2016

ABSTRACT This study aimed to examine the effect of the East African regional integration on intraregional trade. It was carried out based on three specific objectives: i) to examine the effect of the East African regional integration on Uganda's intra-regional export trade; ii) to examine the effect of the East African regional integration on Uganda's intra-regional impott trade; iii)to examine the effect of the East African regional integration on Uganda's intra-regional foreign direct investment. The study was guided by the neo functionalism theory. The study used explanatory research design and the time series methodology. The study used secondary data sources to gather information relevant in reaching at the research objectives. The secondary data was obtained from the Uganda National Bureau of Statistics reports. A multiple linear regression model using Ordinal Least Squares were used to test the significance of the influence of the independent variable on the dependent variable. Results also indicated that in the long run, the East African regional integration had a positive and significant effect on Uganda's intra-regional export and import trade as well as foreign direct investment within the region. It was concluded that regional integration in East Africa in the long run, had a significant positive effect on Uganda's expott and import trade. The study recommended that; the EAC countries should adopt export diversification strategy in a bid to increase aggregate economic growth; the EAC countries should encourage intra-African regional trade since increase in the volume of trade results to increase in the aggregate GDP.

 TABLE OF CONTENTS 

DECLARATION .................................................................................................................. ii 

APPROVAL ........................................................................................................................ iii 

DEDICATION .................................................................................................................... iv 

ACKNOWLEDGEMENT .................................................................................................... v 

LIST OF ACRONYMS ....................................................................................................... ix 

LIST OF TABLES ................................................................................................................ x 

LIST OF FIGURES ............................................................................................................. xi 

ABSTRACT ....................................................................................................................... xii 

CHAPTER ONE: ................................................................................................................ 1 

INTRODUCTION .............................................................................................................. 1 

1.0 Introduction .................................................................................................................... I 

1.1 Background to the study .................................................................................................. I 

1.1.1 Historical perspective ................................................................................................... I 

I. 1.2 Theoretical perspective ................................................................................................ 4 

1.1.3 Conceptual perspective ................................................................................................ 5 

1.1.4 Contextual perspective ................................................................................................. 8 

1.2 Statement of the Problem .............................................................................................. IO 

1.3 Purpose of the Study ..................................................................................................... IO 

l .4Objectives ...................................................................................................................... IO 

1.5 Research Questions ....................................................................................................... 11 

1.6 Hypothesis .................................................................................................................... 11 

1.7 Scope of the Study ........................................................................................................ 11 

I. ?Geographical scope ........................................................................................................ 11 

1.7.2 Content scope ............................................................................................................. 11 

1.7.3 Theoretical scope ....................................................................................................... 11 

1.7.4 Time scope ................................................................................................................. 11 

1.8 Significance of the Study .............................................................................................. 12 

1.9 Operational definition of key Tenns .............................................................................. 12 

CHAPTER TWO .............................................................................................................. 14 

LITERATURE REVIEW ................................................................................................. 14 

2.0 Introduction .................................................................................................................. 14 

vi 

2.1 Theoretical review ........................................................................................................ 14 

2.2 Conceptual framework .................................................................................................. 18 

2.3Related Literature .......................................................................................................... 19 

2.3.1 Effect of regional integration on intra-regional trade .................................................. 19 

2.3.1.1 Regional integration and intra-regional export trade ................................................. 24 

2.3.1.2 Regional integration and intra-regional import trade ................................................ 25 

2.3.1.3 Regional integration and intra-regional flow of foreign direct investment.. .............. 26 

2.4 Research gaps ............................................................................................................... 29 

CHAPTER THREE .......................................................................................................... 30 

METHODOLOGY ........................................................................................................... 30 

3.1 Introduction .................................................................................................................. 30 

3.2 Research Design ........................................................................................................... 30 

3.3 Research Area ............................................................................................................... 30 

3.4Research Instruments ..................................................................................................... 30 

3.5 Datacollectionmethods .................................................................................................. 30 

3.6 Analytical Model .......................................................................................................... 31 

3.7 Time Series Methodology ............................................................................................. 31 

3.8 Ethical Considerations .................................................................................................. 32 

3.9 Limitations in the Study ................................................................................................ 32 

CHAPTER FOUR ............................................................................................................ 33 

DATA PRESENTATION, ANALYSIS AND INTERPRETATION .............................. 33 

4.0 Introduction .................................................................................................................. 33 

4.1 Descriptive statistics ..................................................................................................... 33 

4.2 The effect of East African regional integration on Uganda's intra-regional export trade 34 

4.3The effect of East African regional integration on Uganda's intra-regional export trade. 36 

4.4The effect of East African regional integration on Uganda's intra-regional export trade. 37 

4.5 Pre-Estimation Tests ..................................................................................................... 39 

4.5.1 Normality Test ........................................................................................................... 39 

4.5.2Jarque-Bera normality Test ......................................................................................... 39 

4.5.2Multi-Collinearity Tests (Pearson Correlation) ............................................................ 40 

4.5.3 Heteroscedasticity ...................................................................................................... 41 

4.5.4 Serial Correlation/ Auto Correlation ............................................................................ 41 

4.6Discussion of the Long Run Model Results .................................................................... 42 

4.7Discussion of the Error Correction Model Results .......................................................... 43 

CHAPTER FIVE .............................................................................................................. 45 

DISCUSSION OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS ........ 45 

5.0 Introduction .................................................................................................................. 45 

5.1 Discussion of the Findings ............................................................................................. 45 

5.1. l Discussion of findings on the effect of regional integration on intra-regional export 

trade ................................................................................................................................... 45 

5.1.2 Discussion of findings on the effect of regional integration on intra-regional foreign 

direct investment. ................................................................................................................ 46 

5.1.2 Discussion of findings on the effect of regional integration on intra-regional import 

trade ................................................................................................................................... 46 

5.2Conclusions ................................................................................................................... 47 

5.3 Recommendations ......................................................................................................... 47 

5.4 Suggestions for Further Research .................................................................................. 48 

REFERENCES ................................................................................................................. 50 

APPENDICES ................................................................................................................... 55 

APPENDIX I: TIME FRAME ............................................................................................ 55 

APPENDIX 11: RESEARCHER'S BUDGET ESTIMATES ............................................... 56