Export trade and economic growth in Uganda

Abstract

The main objective of this study was to establish the effect of export trade on economic growth in Uganda for the period 1983 to 2018. The data obtained from World Bank website (development indicators) were annual secondary time series. The study was based on the Total Factor Productivity (TFP) which can appropriately be modified to accommodate the peculiarities of a developing country like Uganda. Analytically, the study generated an Auto Regressive Distributed Lag model (ARDL) after testing for unit root using the; ADF unit root test which revealed study variables were integrated of order zero and order one. The results from the ARDL model did not have any omitted variables or suffer from the problems of spurious regression, heteroscedasticity, or model stability. The findings of the study indicate that both import trade and export trade were found to have a significant effect on economic growth in Uganda both in the short run and long run. From the causality analysis, it was also found out that economic growth causes export trade while export trade does not cause economic growth in Uganda for the period under study The study recommended adoption of an advanced import substitution strategy that does not only produce for the local market but also produces for export and also adoption of an export promotion strategy by specifically adopting capital intensive mechanisms of production as opposed to Labour intensive mechanisms of production to boost exports in the short run and consequently in the long run