The East African Community: Prospects for Sustained Growth

By Catherine McAuliffe, Sweta Chaman Saxena, Masafumi Yabara

November 14, 2012

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Catherine McAuliffe, Sweta Chaman Saxena, and Masafumi Yabara. The East African Community: Prospects for Sustained Growth, (USA: International Monetary Fund, 2012) accessed November 8, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The East African Community (EAC) has been among the fastest growing regions in sub-Saharan Africa in the past decade or so. Nonetheless, the recent growth path will not be enough to achieve middle-income status and substantial poverty reduction by the end of the decade—the ambition of most countries in the region. This paper builds on methodologies established in the growth literature to identify a group of countries that achieved growth accelerations and sustained growth to use as benchmarks to evaluate the prospects, and potential constraints, for EAC countries to translate their recent growth upturn into sustained high growth. We find that EAC countries compare favorably to the group of sustained growth countries—macroeconomic and government stability, favorable business climate, and strong institutions—but important differences remain. EAC countries have a smaller share of exports, lower degree of financial deepening, lower levels of domestic savings, higher reliance on donor aid, and limited physical infrastructure and human capital. Policy choices to address some of these shortcomings could make a difference in whether the EAC follows the path of sustained growth or follows other countries where growth upturns later fizzled out.

Subject: Economic sectors, Exports, Financial sector, Foreign exchange, Government debt management, International trade, Production, Productivity, Public financial management (PFM), Real exchange rates

Keywords: Accelerated growth, Africa, Benchmarking, Common market, EAC country, EAC economy, EAC growth, EAC integration, EAC member, East African Community, Exchange rate, Exports, Financial sector, Global, Government debt management, Growth acceleration, Private sector, Productivity, Real exchange rates, Sub-Saharan Africa, Sustained growth, WP

Publication Details

Pages:

55
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/272
Stock No:

WPIEA2012272
ISBN:

9781475539424
ISSN:

1018-5941

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