Analysis of the macroeconomic determinants of export growth in Uganda (1987-2017)

Abstract

The main objective of the study was to analyze the macroeconomic determinants of export growth in Uganda for the period 1987-2017. The study was prompted by the inconsistencies in the Uganda’s export sector provided the different reforms such as liberalization of the export sector introduced in the economy hence the need for a clarification on the plausible determinants of export growth in Uganda. The study was conducted using data obtained from World Bank tables, the United Nations Statistics Division Common Database, Bank of Uganda and Uganda Bureau of Statistics. The study applied an Ordinary Least Squares modeling to establish the macroeconomic determinants of export growth. Gross Domestic Product and Real Effective Exchange Rate were added to Inflation rate and Gross Capital Formation, the explanatory variables used in the model adopted. Gross Domestic Product was found to have a positive and statistically significant effect in explaining export growth for Uganda between 1987 and 2017 i.e. p-value<0.05. Interestingly, Inflation Rate, Real Effective Exchange Rate and Gross Capital Formation as per the findings had a negative effect on export growth. This study recommends that in order to improve export growth, Uganda needs to focus on the modernization of agriculture since it is the major source of exports. There should be diversification of exports preferably to include manufactured good but emphasis should be put on utilizing the export potential of the newly discovered oil which if exported would attract higher prices than the current blend of exports.