Jobs and Regional Economic Integration in East Africa

Disclaimer Statement: The views presented in this paper are those of the authors and do not necessarily represent the views
of Consortium partner organisations, DFID or the UK Government. The authors take full responsibility for
any errors or omissions contained in this report.

1. Executive Summary 
The purpose of this paper is to provide a response to two helpdesk queries. The first query asked:
1. What is the link between regional economic integration and job creation in the East African
Community (EAC1)?
2. What is the status of labour mobility in East Africa, and how could it affect job creation?

The second query asked:
1. What actions need to be taken from a regional perspective to support job creation?
2. Is there an obvious plan of action to promote job creation from a regional perspective, or does
more work need to be done to develop such a plan?

The first help desk query found that there is a gap in the empirical evidence in terms of the link between
regional economic integration and job creation in the EAC. Despite a wide body of theoretical literature
on the limitations and benefits of Regional Trade Agreements (RTAs2), empirical studies on the effects
of RTAs, and evidence on the linkages of regional integration to trade, economic growth and poverty
reduction, the associated employment effects are unclear. In a great part this is because the links are
complex and indirect. Whilst evidence indicates that regional economic integration does have linkages
to employment (and potential job creation) and standard economic theory predicts an increase in
comparative advance and subsequently competition, entrepreneurship and jobs; an increase in
employment opportunities is dependent on a variety of other factors and may even decrease as a result
of regional economic integration.

The link between labour mobility and job creation in the EAC could not be validated during this query
response. Existing literature focuses on the restrictions to labour mobility in the EAC but there is no
corresponding quantitative data that examines the linkages between migration (both short and long
term) or labour migration and job creation in the EAC. There were gaps in the evidence base regarding
movement from rural to urban areas and amongst sectors, empirical evidence on labour flows was
outdated and evidence on the type of workers who were able to move between EAC member states was
scarce.

The second helpdesk query identified areas which support job creation from a regional perspective.
These were; implementation of existing legislation and policy, investment in the transit sector, light
industry, education and vocational training, improved enabling environment, research and
dissemination on the benefits of regional integration and improved labour market data. Whilst there are
strategies in place to address these areas the consensus from Key Informant Interviews (KIIs) and the supplementary desk review is that there is not an identified and cohesive plan on job creation from an
EAC wide perspective. Nevertheless, job creation does feature strongly in donor programming.
An overview of RTAs3 as a subset of trade, the link of trade and RTAs to employment and an
introduction to the EAC is provided. The scope of this query is limited to the EAC.

The approach used to answer the above questions were a secondary desk review of data and
documentation and KIIs with the Department for International Development (DFID), the United Nations
Development Programme (UNDP) and the United States Agency for International Development (USAID).

2. Outline of the Query and Approach 
The help desk query asks four questions:
3. What is the link between regional economic integration and job creation in the East African
Community (EAC)?
4. What is the status of labour mobility in East Africa, and how could it affect job creation?
5. What actions need to be taken from a regional perspective to support job creation?
6. Is there an obvious plan of action to promote job creation from a regional perspective, or does
more work need to be done to develop such a plan?

The first of the two questions are broken into four sub-questions:
a) Wider evidence (from beyond the EAC) that regional economic integration leads to job creation;
b) Evidence as to why underemployment and unemployment exists in the EAC;
c) Evidence of the positive and negative role a common market in the EAC will have on job creation
and the reduction of underemployment and unemployment; and
d) Evidence as to how labour mobility affects job creation.

These sub-questions are answered through a secondary review of existing literature, data and other
documentation. Please refer to the conclusions and the overall findings (Section 6) that answer these
sub-questions directly.

The third and fourth of the main questions are answered through a secondary review of existing
literature and Key Informant Interviews (KIIs) with key donors and implementing agencies.
The structure of this help desk response is as follows;-Section 2 provides an overview of Regional Trade
Agreements (RTAs), the link of trade and RTAs to employment and an introduction to the EAC.

Section 3 explores the first of the helpdesk queries: What is the link between regional economic integration and
job creation in the EAC?.

Section 4 explores the second helpdesk query: What is the status of labour
mobility in East Africa, and how could it affect job creation.

Section 5 responds to helpdesk queries
three and four. Section 6 provides an overview of findings.

3. Background and Introduction 
Section 2 provides an overview of trade and the link to employment, an overview of RTAs as a subset of
trade, and an introduction to the EAC.

3.1 Trade and Employment
Trade can be a powerful engine for economic growth and poverty reduction with the significant role of
trade encapsulated by the “Aid for Trade” integral role in donor programming. As summarised by the
World Trade Organisation (WTO, 2008)5 trade supports growth by enhancing a country’s access to a
wider range of goods and services, knowledge and technologies. It stimulates entrepreneurship in the
private sector. It attracts private capital, creates jobs and increases foreign exchange earnings. By doing
this, it generates resources for development.
Not so obvious, as outlined by the Organisation for Economic Co-operation and Development (OECD,
2012)6 are the associated employment effects. A challenge, also highlighted by McMillan and Rodik
(2011)7, is ensuring that structural change moves displaced workers into more productive sectors
without increasing unemployment.
Evidence on the link between trade and employment is explored in more detail in Section 3.1.1.

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