INDUSTRIALIZATION DRIVE, FISCAL POLICYAND CROSS BORDER TRADE PERFORMANCE AMONG EAST AFRICAN COUNTRIES
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Date
2020-08
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Publisher
University of Dar es Salaam Business School
Abstract
Industrialization has been considered as a key to the development of nations. Since its re-established in 1993, the East African block has been striving to develop various strategies to ensure equitable development within the region and increasing trade opportunities. For the past four years, the industrialization has been the key budgeting focus of the states. This study as analyses the policy reforms towards industrialization drive among the countries and its implications to the performance of the trade across the nations. A contextual analysis of the fiscal policies was undertaken based on Pelkmans (2006) industrial policy framework and review of the performance of the regional cross border trade based on the Country Similarity Theory and Porter’s National Competitive Advantage Theory. The results suggests that Tanzania’s fiscal focus have been industrial infrastructure development while the rest of the countries has been local manufacturing initiatives. EAC countries through common external tariffs have been in the recent years focusing on the promotion of local industries by setting high tariffs on the importation of processed food items and vegetable oils. However, Tanzania has been in the past five years a net exporter of raw food items and Kenya a net importer of food items across the member states. Kenya seems to leading the EAC bloc in industrialization and incentives provided as well as local tax revenues to the fiscal policy. It is therefore recommended from this study that strategic alliances for clustering and promotion of industrial policies based on the Pelkmans (2006) should be adopted for sustainable industrial policy in the region.
Description
Presented in the 19th International Conference on African Entrepreneurship and Small Businesses
Keywords
cross border trade, internationalization, government budgets, fiscal policy