The impact of trade regimes on industrialisation; trade and technological diffusion in the East African Community

Abstract

East African governments have long recognized the importance of industrialization and structural transformation for sustainable growth in the region. However, the region has not successfully diversified its production and export patterns. In light of the changing global environment and the need for sustainable job creation, it is necessary to explore domestic and regional economic policies that will drive industrialization and the structural transformation in the region. Given the importance of regional trade in the East African Community (EAC) and the role of innovation in diversification, we investigate the role of regional trade in driving innovation in the EAC region. This paper analyzed the role of trade and R&D spillovers in transferring technology within the East African Community. We examined the impact of R&D that reduced the costs of production in the innovating country (Kenya) and also led to technology spillovers through intra-industry trade within the East African Community and thereby reducing the costs of production in other countries in the region.