Masters Degree Dissertations

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Browsing Masters Degree Dissertations by Subject "East African Community"

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    Economic integration and private investment : a case Study of the East African Community (EAC)
    (Kyambogo University (Unpublished work), 2024-03) Tibihika, Amon
    Economic integration necessitates the removal of trade barriers within the union, as well as the imposition of common trade barriers. All this has been linked to potential GDP growth and growth in private investment (Martin-Mayoral et al., 2016). Therefore, this study conducts an empirical examination of the impact of Economic integration on Private investment in the East African Community in 5 selected partner countries. Additionally, it aims to examine the effect of some selected macroeconomic variables, such as taxes, inflation, domestic credit, and real interest rate on Private Investment in the EAC member states. The research utilizes panel data obtained from secondary sources covering a period of 1990 to 2021 in five partner nations of the East African Community. The primary source of data for this study was the World Bank Development Indicators database. The study extends the investment model by Jorgenson (1967) which is based on the assumption that firms aim to maximize their profits by choosing the optimal level of investment that balances the expected returns on investment with the cost of capital. And Regional economic integration theory by (Viner, 2014) argues that the drive for regional integration goes beyond just the elimination of tariff barriers. Analytically, the panel data technique of fixed effects is used for the empirical analysis as guided by the Hausman Test. Economic integration was found to have a positive and significant effect on private investment at 1 percent level of significance in the EAC region. The coefficient of Economic integration means that when Countries join EAC, they are predicted to register higher private investments of about 13 percent more than before joining keeping other factors constant. In addition, Inflation had a positive and significant effect on private investment. In contrast, real interest rates had a negative effect, though significant effect on Private investment. However, credit and taxes had no significant effect on private investment. Based on these facts, the report suggests that East African Community (EAC) members should encourage more member Countries to join the (EAC). If Countries join resources, they are able to have a conducive environment for private investment. EAC Members should also establish a united East African Development Bank that can provide credit to private investors at very low-interest rates as is the case with developed Countries. Central Banks should adopt appropriate monetary policies to keep inflation moderate.