Because of the higher rates of interest rates on CD investor usually hold them up to the date of maturity. While critics of the East African Federation are skeptical such a union can be achieved by the proposed date of 2012, the integration set to begin in July has been heralded as an economic and political achievement. The study employed a neoclassical growth model regressing the growth rate of real per capita GDP on a measure of the degree of international financial integration. The table shows that government security rate (dispersion from mean squared) significantly affect economic growth at 5 per cent level of significance. Members of East African Community will formally begin Thursday the process of integration.
The impact of economic integration on the economic development of, east
Items may economic integartion in east africa ma thesis only be viewed and downloaded for private research and study purposes. Thus,.14.15 Where L0 and A0 are the values of L and A at time. Stock markets, banks and economic development: theory and evidence, EIB Paper 8, 36-54. This means that the introduction of Rwanda and Burundi to the East African Community had a statistically significant positive effect in the average regional growth. The budget deficit as a percentage of GDP remained below 5 percentage of GDP starting from 1987.
This is an important issue because economic growth in the EAC is low and highly variable among these countries, and need to be improved. However, there are conflicting views concerning the role that financial integration plays in economic growth and by extension trade. This means that a one unit change in government balance causes economic growth to change.2 percent. Accordingly, the following dynamic panel will be modeled.21 Where, Z is a vector of additional predetermined variables that the study used to control for other potential growth determinants like inflation, corruption and government balance. Following these reforms, the economy grew at 7 percent a year from 2000 to 2009, up from 3 percent, on average, in 1990s.
Regional Financial integration and economic growth in the, east, african
The study did not support the view that international financial integration per se accelerates economic growth even when controlling for particular economic, financial, institutional and policy characteristics. The coefficient is, however, not statistically significant. This translates.9 People save a constant fraction of total income given.10 The model maintains the following basic assumption about production;.11 Where, Y is output, K is capital, L is labor and A is the level of technology. Despite some reservations from smaller countries, analysts believe the union will greatly benefit the region. "In the global world a single country, and particularly a single African country which has a very small economy, it makes sense for there to be a greater bloc, for two reasons says Shaw. Annual time series data for the period 2000 to 2009 was collected for the four East African Community economic integartion in east africa ma thesis countries, namely: Kenya, Tanzania, Uganda and Rwanda. Tukenmze (2005 for example, found no evidence that financial integration supports economic growth.
Sgmm approach assumes linearity and that the disturbance term is not autocorrelated or, in other words, that the applied instruments in the model are exogenous. As for Kenya, the country experienced moderately high growth rates during the 1960s and 1970s, with real GDP growth averaging 7 percent a year in the 1970s. Kasekende,., and Ngeno,. View PDF, download PDF, abstract, this paper aimed at establishing economic integartion in east africa ma thesis effects of regional financial integration on economic growth in East African Community (EAC). Further, the East African Community is pursuing strategies of financial integration through programmes for the harmonization of regulatory and legislative frameworks and policies, and the promotion of cross-border investments and listing of securities expected to establish stronger links with capital markets in more developed countries. Journal of International money and finance 9(3 503-17. Table.2 sgmm Dynamic Panel Estimation Results of Effect of Government Security Rate on Economic Growth Dependent variable :Economic Growth ( GDP) Indipendent Variable Coefficient Standard Error P z Lagged economic growth -0.1672299.242768.491 Exchange rate(dispersion from mean squared) -4.49e-07. Regional financial integration was proxied by three measures; squared dispersion from the mean of the four countries: bank rate spread, government security rate, and real exchange rate. Three measures of regional financial integration were used. Some features of this site may not work without. The East African Community now will look to consular integration, which could see the bloc adopt a common immigration policy within the coming year.
Chapter ONE: introduction.1 Background to the Study, political, economic and regional financial integration economic integartion in east africa ma thesis has been part of African strategy to overcome fragmentation, marginalization and improve the continents position in the global political economy. Investment in regional bonds can contribute to the development of regional bond markets. Higher squared deviations of the exchange rate implies that there is little convergence in the financial markets while lower squared deviations of the exchange rate implies that there is high regional financial integration in the region. Does Financial Integration Spur Economic Growth? From equation.1.2 Where Ft is holdings of foreign capital in the original period while Ft1 is foreign capital in the following period. A Political and Economic Assessment of the Feasibility and Desirability of an East African Monetary Union (Unpublished PhD Thesis). The study found that international financial integration had a statistically significant effect on growth in the first era of global finance. Blundell., Bond,. Applying the result that a variables growth rate equals the rate of change of its log to equation.12 and.13 implies that the rates of change of the logs of L and A are constant and they are equal to n and g, respectively. "Kenya is a hub, it is the hub and it will benefit a lot says Shaw. Los usuarios también descargaron. Table.2 shows the effect of regional financial integration on economic growth in EAC, when Government security rate (dispersion from mean squared) is a proxy for regional financial integration, with the same control variables. The study used Generalized-Method-of- Moments (GMM) estimators developed for dynamic panel data.
Economic, integration in the Middle, east and North, africa
Lower cost of equity capital eventually encourages investment. "One: the potential for trading within that bloc is great, and we have seen. Given certainty of capital profitability, savings produce its investment through direct transmutation. The Protocol also will eliminate the vast amounts of restrictions and regulations often required to do business in the region. Whereas over 80 percent of the workforce of the other countries is in agriculture, a major source of employment in Kenya is the service sector, accounting for 56 percent of total GDP. Initial Conditions and Moment Restrictions in Dynamic Panel Data. Schularick and Steger (2006) examined the impact of international financial integration on economic growth. References Acemoglu,., and Verdier,. The table shows that real exchange rate (dispersion from mean squared) significantly affect the coefficient of economic growth negatively at 5 level of significance, after controlling for other growth drivers such as the inflation, government balance and the time dummy variable. Economic growth was measured by real per capita GDP growth rate captured over the period of the analysis. This has been made possible through IMF-backed economic reforms that were started in 1987 with the principle objective of restoring producer incentives through appropriate policies, improving capacity utilization of industries, increasing efficiency in public sector and attaining both external and domestic. American Behavioral Scientist 8(3 8-14.
To this end, the EAC partner countries ratified the Common Market Protocol in year 2010 and turned the attention to monetary and financial integration, and the negotiation of a Monetary Union Protocol. This implies that foreign direct investment influences economic growth by a rate of change.45 per cent. Turkey's ambassador to Kenya announced his country would establish an Export Processing Zone within the East African Community to take advantage of the region's potential. This is because the higher the dispersion from the mean squared, the lower the regional financial integration and vice versa. If NX 0 (exports are greater than imports then the economy must be building up assets from abroad and in general (r is assumed constant).