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- Title
Do Small Economies Gain in Customs Union of Larger Economies? Assessing the Decision of Rwanda to Join the EAC Using a Partial Equilibrium Analysis.
- Authors
Mbelle, Ammon V. Y.
- Abstract
Small economies often think of risks when joining a Customs Union composed of members with relatively larger economies. This article analyses the decision at the time Rwanda decided to join the EAC. Most research work often do not cover this aspect. To recap, Regional Trade Arrangements have evolved over time mainly for two reasons. First, the need to address the challenges arising out of implementing "greater multilateral liberalization" within the context of the World Trade Organization and second, the need to go beyond a mere trade agenda to achieving broader socio economic gains through "deeper integration". One of the key instruments in a regional integration is the Customs Union -- an agreement by partner states to adopt a Common External Tariff, over and above Free Trade Area arrangements. Typical of many integration schemes is the phenomenon of diverse status of member countries with the potential of asymmetry in realized benefits. The assessment used a Partial Equilibrium model analysis. The major finding was that although Rwanda suffered revenue loss due to implementation of the East African Community Customs Union, the country gained in terms of welfare. The main conclusion of the paper is that integration is beneficial even to small economies and that these gains become larger as the integration deepens.
- Subjects
SMALL state economy; CUSTOMS unions; INTERNATIONAL economic integration; AFRICAN economic integration; EAST African Community; ECONOMIC equilibrium; FREE trade
- Publication
Tanzania Economic Review, 2018, Vol 8, Issue 1/2, p70
- ISSN
0856-3373
- Publication type
Article