Intra - Industry Trade in Travel Services in East African Community: A Case of Kenya

Abstract

Faced with pre-mature deindustialisation and low services trade integration, the East African Community (EAC) member countries need to enhance intra-industry trade in services to realise their sustainable development agenda. This study examined the influence  of per capita income, foreign direct investment (FDI), manufacturing value-added, and ICT infrastructure development on intra-industry trade (IIT) in travel services between Kenya and the EAC  member countries. Using the poison pseudo maximum likelihood high-dimensional fixed effects estimator(ppmlhdfe) estimator, the gravity model  was used to analyse annual panel data (2005-2024) sourced from World Bank, CEPII, World Trade Organization and African Development Bank. Purposive sampling was applied in selecting the economies of Kenya,Uganda,Tanzania,Rwanda and Burundi which constituted the target population.The  intra-industry indices revealed that Kenya had an increasing IIT in travel services with the economy of Uganda and a decreasing IIT with the economy of Tanzania. However, for the economies of Rwanda and Burundi,  the study revealed the existence of inter-industry trade. The study found FDI ( β=0.448, p-value = 0.017 ) to have a positive and significant effect on intra-industry trade in travel services between Kenya and the selected EAC countries. This study shows the significance of regional multinational corporations on travel services among the EAC members economies. Therefore, there is need to promote and sustain the establishment of regional multinationals corporations across EAC  to enhance the intra-industry trade in travel services.

Key words:Kenya, East African Community, Gravity model, Intra-Industry Trade,Travel Services.

DOI: 10.7176/JESD/17-5-03

Publication date: August 30^th 2026