Growth of Kenyan exports within EAC regional Bloc

Abstract

This study applied the gravity trade model to evaluate Kenya’s benefits from regional
 trade within the EAC partner states and the role played by each partner country towards
 the growth of Kenyan exports. A panel data analysis was used to accommodate the time
 invariant country specific effects and to capture the relationship between the relevant
 variables overtime. We found the fixed effects model suitable and preferred to the
 random effects gravity model. The study affirmed the gravity model expectations that
 National income, population and Distance (proxy for transport costs), are important
 determinants of bilateral trade. In addition, openness variable was found to be
 insignificant though it had a positive relation with growth of Kenyan Exports. The results
 further reveal that Kenya has tremendous trade potential with Uganda, Tanzania and
 Burundi hence trade should be encouraged in the bloc.