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Regional Market Integration and City Growth in East Africa: Local but no Regional Effects?

Andreas Eberhard-Ruiz and Alexander Moradi ()

No 2018-09, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: We investigate changes in the spatial concentration of economic activities after the establishment of a regional economic community between Kenya, Tanzania, and Uganda in 2001. Measuring city growth using satellite imagery of lights emanated out to space at night, we demonstrate that cities close to the community’s internal borders expanded more than other cities further away. The growth effect is temporary and also highly localized: only cities less than 90 minutes of travel from the border experience an acceleration in growth rates; after four years growth rates revert to their pre-treatment level. We show that this is consistent with an asymmetric reduction in trade costs for two types of trade modalities that co-exist in many parts of sub-Saharan Africa, local small-scale trade and regional large-scale trade, with a larger reduction in costs of the former. Yet, while local e?ects are relatively large, equivalent to a 5.6% higher GDP for cities near the EAC’s internal borders, they do not imply a large reorganisation of economic activity across space nor a substantial alteration of countries’ urban systems.

Keywords: Market Integration; Trade; Cross-Border Trade; City Growth; Periphery; Africa (search for similar items in EconPapers)
JEL-codes: F1 F14 F15 O17 O18 O55 R12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-big, nep-geo, nep-int and nep-ure
Date: 2018
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Handle: RePEc:csa:wpaper:2018-09