Determinants of Export Participation in East African Manufacturing Firms

Abstract

The main objective of this study was to analyze the determinants of export participation of manufacturing firms in East Africa. In order for East African manufacturing firms to achieve global competitiveness, they need to have an indication of the factors that influence their export participation. Regression results using probit estimation procedure indicate that capital, foreign ownership, education level of the manager and training in Uganda, capital, training of workers and proportion of unskilled workers in Kenya, and firm size and foreign ownership in Tanzania, positively influences export participation of manufacturing firms. To promote exports, Tanzania should design strategies to grow small firms into large ones using measures such as loan guarantee schemes for small and medium firms, tax holidays for joint ventures and mergers, etc. The Ugandan and Kenyan government should also provide incentives for capital imports such as maintaining the current zero rating of capital imports. Lastly, Ugandan and Tanzanian government should design strategies aimed at attracting foreign direct investment, such as improving economic productivity through the provision of infrastructure and labour force training.

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