Business reforms can spur economic dynamism in the East African Community
East Africa is famous for its breathtaking landscapes and its unique concentration of wild animals. Could it also become as famous for its dynamic economic development?
In 2009 I came to Tanzania to work on tax harmonization in the East African Community (EAC). The Common Market Protocol was about to be signed and one of the biggest goals was to tap into the economic potential of the region by facilitating (cross-border) trade and improving the business climate. A year later, the five Partner States of the East African Community ratified the Common Market Protocol in order to realize “accelerated economic growth and development through the attainment of the free movement of goods, persons, labor, the rights of establishment and residence and the free movement of services and capital”. The overarching goal of the East African Community is to achieve sustainable economic growth in order to increase employment and reduce poverty.
Many important policies are implemented at the national level. Monetary policy, fiscal policy, and many regulations are key examples. Pure time series or before-after analysis of the impacts of changes in these policies on the economy of a country will be contaminated by other changes going on in the economy. Simply trying to difference out global trends will not account for systematic differences in the growth path of the country where the reform took place from the average global growth path. This makes evaluation of the impacts of such policies difficult.