Is cross border trade necessary for regional economic growth? Analysis on selected East African member states.

This study analyzes the impact of cross-border trade on economic growth in East Africa from 1960 to 2022, focusing on Kenya, Tanzania, and Uganda. It addresses the limited empirical research on how trade across borders influences long-term development in the region. Key variables examined include transportation infrastructure, trade openness, foreign direct investment (FDI), inflation, tariff rates, and trade volumes. Using panel data and econometric models Mean Group (MG), Dynamic Fixed Effects (DFE), and Pooled Mean Group (PMG) – to capture both short- and long-run effects. Results show trade openness, FDI, and transport infrastructure positively drive growth, while inflation and high tariffs hinder it. Cross-border trade volumes significantly boost long-term growth in Kenya and Uganda, but Tanzania shows differing trends, possibly due to structural or policy issues. The study recommends enhancing transport infrastructure, reducing trade barriers, controlling inflation, and formalizing informal trade to support sustainable growth and regional integration in East Africa.