Anna Chingarande

Comparative advantage and economic performance of East African Community (EAC) member states

Abstract The researchers have investigated comparative advantage in the East African Community member states. They have also investigated economic performance of the member states. Balassa’s Revealed Comparative Advantage (RCA) index was used to establish member states’ comparative advantage. An analysis of real GDP, employment levels and stability of exchange rates was used to measure their economic performance. The results show Kenya has comparative advantage in 471 product codes, Tanzania in 471 products, Uganda in 437 product codes, Rwanda in 275 products codes and Burundi in 152 product codes. There is therefore evidence that the member states have revealed comparative advantage although in limited products and that economic indicators show they have performed well. However, there is a need that GDP growth rates should exceed population growth rates in order to have sustainable economic growth.

Does Mercosur Possess Comparative Advantage

Abstract The researchers investigated comparative advantage in MERCOSUR. The main objective was to find out whether MERCOSUR member states possess comparative advantage. Balassa’s Revealed Comparative Advantage (RCA) technique was applied. Brazil was found to have comparative advantage in 674 product lines, Argentina in 518 product lines, Paraguay in 485 product lines, Uruguay 312 product lines and Venezuela in 83 product lines. The researchers concluded that MERCOSUR indeed has comparative advantage although the number of products in which it has comparative advantage is very limited. They therefore recommended that MERCOSUR should consider admitting more members in order to improve the number of the products in which comparative advantage may be revealed.

Is South Africa really a giant of Sub-Saharan Africa in international trade?

The study investigated the comparative advantage of South Africa and the role played by export promotion. South Africa was found to have comparative advantage in 824 product lines. The country was found to be a giant player in SubSaharan Africa to the extent of surpassing other African countries such as Egypt, Mozambique, Botswana and Zimbabwe. South Africa also surpassed countries such as Mexico and Canada. The SubSaharan country should continue to promote its exports in international markets.

The Relative Effectiveness of Monetary and Fiscal Policies on Economic Activity in Zimbabwe (1981:4-1998:3) 'An Error Correction Approach'

This paper examines the impact of monetary and fiscal policies on economic activity in Zimbabwe by employing a modified St Louis equation for the period 1981:4 to 1998:3. The main objective is to determine the relative effectiveness of monetary and fiscal policies on the economic growth process in Zimbabwe using the new econometric techniques of time series, cointegration and error correction approach. Secondary data was collected from various publications like, Government of Zimbabwe (1987): Annual Economic Review of Zimbabwe, Central Statistical Office (1998) National Accounts 1985-97 and Reserve Bank of Zimbabwe (various issues) monthly and quarterly bulletins. Quarterly data was used to make a total of 68 observations. LIMDEP Version 6.0 and PC GIVE Version 8 packages were used for data analysis. The regression results suggest that the monetary influence is relatively stronger and more predictable than fiscal policy in determining economic activity. These results suggest that monetary policy can be relied on as a successful macroeconomic stabilization tool in Zimbabwe. Fiscal policy should be streamlined as it is found to have an insignificant impact on economic activity in Zimbabwe. The impulse dummies which are included in the model in order to reduce the impact of outliers in the scaled residuals were also found to be significant. These impulse dummies are for the period when Zimbabwe experienced severe drought and also a bumper harvest. Exports had an insignificant impact on economic activity.

Trade liberalization: is it a useful program for agricultural and manufacturing sectors in developing countries?

The authors investigated whether trade liberalization is a useful programme for agricultural and manufacturing sectors in the developing countries. A historical approach was used to measure impact. There are mixed results regarding the impact of trade liberalization. The results which show negative impact are generalized without being very exact the nature of impact. The results which show positive impact of trade liberalization have generally based their evidence on real GDP and per capita income growth rates while ignoring other factors which contribute to their growth. Two schools of thought have emerged namely pro-trade liberalization and those against trade liberalization. Indicators are purposely chosen and the results support that school of thought. It is recommended that studies of trade liberalization use a number of indicators to measure impact. That studies should be able to iso;ate other influences on the indicator before making conclusions. There is a need to come up with uniform indicators to measure impact. A developing country should initiate a comprehensive study of its economy before entering zero tariff agreement with developed country. Developing countries should attract transnational corporations to improve efficiency. Policies which encourage redistribution of incomes should be introduced.