Intra-Industry Trade in Transport Services between Kenya and East African Community Member Countries
DOI:
https://doi.org/10.47604/ijecon.3902Keywords:
Intra-Industry Trade, Transport Services, East African Community, Gravity ModelAbstract
Purpose: This study investigated the effect of per capita income, foreign direct investment, manufacturing value-added, and ICT infrastructure development on intra-industry trade in transport services between Kenya and the selected East African Community members, to enhance trade in transport services integration in the region.
Methodology: Purposive sampling was applied in selecting the economies of Kenya,Uganda,Tanzania,Rwanda and Burundi which constituted the target population. Gravity model with PPML estimator was used for analysis,with annual panel data ( 2005 to 2024) sourced from World Bank, CEPII, World Trade Organization and African Development Bank.
Findings: The intra-industry indices revealed that Kenya had a lower than 50 percent intra-industry trade in transport services with the Uganda and Tanzania. However, Kenya trade in transport services with Burundi and Rwanda was mainly inter-industry trade. Difference in per capita income ( β=0.004, p=0.013) had a positive effect while FDI (β= -0.69, p=0.000), and ICT Infrastrucuture development (β= -0.92, p=0.000) had a significant negative effect on Kenya intra-industry trade in transport services with th EAC.
Unique Contribution to Theory, Practice and Policy: This study reveals the significance of harmonising ICT infrastrucutre development across the EAC in order to enhance intra-industry trade in transport service. This will encourage interoperability between ICT transport infrastructure that will promote trade in transport services integration across the region.
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