Growth Effects from Trade Diversification in The East African Community

The purpose of this thesis is to investigate the relationship between trade diversity and growth in the East African Community. This was done by measuring different levels of diversification in exports and further test if they could contribute to explaining the different growth levels between member countries. Using data collected for the five member countries; Burundi, Kenya, Rwanda, Tanzania and Uganda over a thirteen year period, the tests investigated whether the traditional growth models, with the assumption of unconditional convergence, could explain the different growth rates or if there seemed to be other underlying structures that can’t be explained through these models. A sign of divergence in growth was found indicating other explanatory variables than used in traditional models. Further adding measures of export diversity, a correlation between export diversity and GDP per capita growth was found