Impact of tea production on Uganda’s economy for the years 1980-2018

Abstract

The quantity of tea exports has importance to the economy of Uganda. Despite the investment being done in the sector, significant impact of its export on the economy hasn’t yet been realized. This study investigates the impact of tea production on Uganda’s economy. It breaks down the impact in short run effect, long run effect and casual relationship between tea export and gross domestic product in Uganda between the period 1980 and 2018. The study used secondary data from International Monetary Fund, World Bank and Food Agriculture Organization datasets. GDP data, Inflation Rate data, REER data and Quantity of tea export data spread sheets. The data used is yearly data covering the period from 1980 to 2018. The data was analyzed and presented using various tests and statistics such as descriptive statistics, correlation analysis, long run regression analysis, error correction model, ADF test, Jarque Bera test for normality, Engle Granger cointegration test and Granger causality test. The results revealed a positive and significant relationship between Gross Domestic Product and Quantity of tea export in long run in Uganda. The results also reveal that there is no casual relationship. The study concluded that Quantity of tea export has significant relationship on gross domestic product in long run and not in short run. The government should do more investment in short run to increase its quantity of tea exports