Do Regional Economic Disparities Promote Regional Value Chains? A Case Study of East Africa Community Member States
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Date
2024-12
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Abstract
Economic differences impact regional value chain expansion. This study aims to examine how
regional economic disparities (RED) affect the development of food and beverage value chains
(RVCs) in the East Africa Community's (EAC) manufacturing sector. The dynamics of
regional value chain promotion in EAC's manufacturing sector are examined using the New
Economic Geography (NEG) model. Utilizing secondary data from five member states and the
variables; taxes, labor, incomes of executives and laborers, intra- and extra-regional trade, and
gross value added. To answer the research questions, regression analysis was used to shed light
on (i) the effect of regional economic disparities on the promotion of regional value chains and
(ii) the effect of prices on regional value chains. The results indicate that whereas laborers' pay
and taxes have a negative and substantial impact on the promotion of RVCs, disparities have a
positive and significant impact on price, intra- and extra-regional trade, executive salaries, and
overall promotion of RVCs. This study will help EAC member states maximize their
industrialization, economic development, and export performance. The results show that
workers need to keep learning new skills to be competitive in the rapidly evolving industrial
sector. The manufacturer's adoption of modern technology and its industrial location are also
significant variables. Wages ultimately determine output, and countries with higher worker
wages typically have higher levels of intraregional trade. For this reason, protectionist policies
must be used for EAC states to increase intraregional trade.
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Kainga, E., & Muthoga, S. (2024). Do Regional Economic Disparities Promote Regional Value Chains? A Case Study of East Africa Community Member States. International Journal of Economics, Business and Social Science Research, 2(6), 20-33.