Assessment of the Factors Impacting on Export-led Growth Policy Performance of East African Countries: The Panel-Autoregressive Distributed Lag Model

Tilahun Abera, Yu Yong


Exports play a crucial function in a country's economy and financial system, figuring out the extent of employment economic growth, along with the balance of payments. East African Countries have installed numerous trade coverage or policy reforms to promote and improve the export sectors. However, their proportion in general world exports continues to be very low. Despite its massive resource potential, the region's balance of trade stability for multiple years is in deficit; its export-led growth performance persisted poor notwithstanding governments' promotion and support. Hence, it's worthy of looking at the fundamental factors impacting East African countries' export performance. The present study dominantly applied the data of Africa and the Global development indicator of 20 years (2001 to 2020) for 9 East African countries, using a panel-ARDL econometric model. The descriptive outcomes of the research depict that in East Africa, the exports were low; the external trades denoted a continuous deficit in the business, industrial items dominated in the import basket, and primary items were overlooked in the export basket. The pooled mean group (PMG) estimation result also suggests that all the macroeconomic factors (independent variables) FDI, GDP, REER, INF, TOT, and IND are notably affected export in East Africa in the long run. Whereas GDP is the single variable that substantially influences export from East African nations in the short run. The results advise that inflation rate, foreign direct investment inflows, and the effective actual exchange rate had statistically detrimental or negative impacts on export performance in the study countries. To this end, the outcomes stand important for redesigning export trade policies/strategies to boost the performance of exports and the overall ultimate economic growth in East Africa.

Keywords: East Africa, Export performance, Export-led growth policy, Macroeconomic factors, Panel data,    PMG/ARDL

DOI: 10.7176/DCS/12-4-01

Publication date: April 30th 2022

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ISSN (Paper)2224-607X ISSN (Online)2225-0565

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