Key points are not available for this paper at this time.
Abstract Regional economic disparities in developing countries impact growth of regional value chains to compete in the global markets. Regional economic disparities are the difference in economic capabilities between states in a region. The objective of this paper is to explore the impact of regional economic disparities (RED) on growth of food and beverage regional value chains (RVCs) in the East Africa Community (EAC) manufacturing sector. The paper employs the New Economic Geography (NEG) model in investigating the dynamics of promotion of regional value chains in EAC’s manufacturing sector. By making use of secondary data from five member states, the author surveys labor in the manufacturing sector, total income of laborers and executives, taxes, intra-regional and extra-regional trade in foods and beverages, and gross value added as the regional value chain determinant. To answer the research questions, regression analysis was used to shed light on (i) the effect of regional economic disparities on promotion of regional value chains in EAC and (ii) the effect of prices on regional value chains. The findings show disparities having a positive and significant effect on promotion of RVCs, price, intra and extra-regional trade, and executive salaries while laborers’ salaries and taxation have a negative and significant effect on the promotion of RVCs. The significance of this research lies in the potential to enable EAC member states to realize and leverage their protection, industrialization, export performance and economic development strategies. Future research work may look into Climate Changes, Export Controls and Politics as promoters of regional value chains as well as infrastructure, and technology. The results show need for laborers to acquire more skills necessary to remain relevant in the ever transforming manufacturing sector. Further, that technology absorption is crucial among producers and regional tax agreements are necessary in industry location decisions. Finally, that wages determine production and the nations paying their workers more tend to enjoy more intraregional trade. According to these findings, EAC member states need to increase intra-regional trade, apply some protectionist policies as well encourage increased budgets for education and building of institutions while also attracting foreign direct investments with tax reliefs. Keywords: Trade diversion, regional value chains, regional economic disparities, global value chains, intra-regional trade, competitive advantage and price volatility,
Erastus Kainga (2024) studied this question.