Time Series Analysis of the impact of exports on Uganda’s GDP

Abstract

This study investigated the impact of exports on Uganda’s GDP growth. This research method takes a quantitative approach. The data was collected from the World Bank in the form of time series from 1993 to 2022. The data analysis technique employed time series data analysis with the ARDL (Autoregressive Distributed Lag) model and Error Correction Model with the help of STATA software. The research tested for stationarity using ADF. The results showed that there was a mixture of stationary and non-stationary variables at first difference. Correlation analysis revealed a very strong positive relationship between exports and GDP. The ARDL and ECM results showed exports have a positive and significant effect on GDP in the short and long run, but real effective exchange Rate has a negative and insignificant effect in the short and long run. Furthermore, findings from regression analysis revealed that exports are significant while other variables are insignificant. Finally, the recommendations drawn from the study included; much emphasis should be put on the key factors that positively affect GDP growth rates. The study recommends that; there should be emphasis on improving on the exportation of processed commodities. The government through its financial and economic policy planning organs such as the central bank needs to take into account the effects and causation of each of these variables namely exports, FDI, REER, economic growth on each other for proper planning of the economy. From the positive short run relationship between exports and GDP policy implications must therefore be designed in a manner that encourages the country to produce more exports. The government needs to provide more land for investors to enable them to have investments enhanced in the growth and sustainability of the businesses. The study recommends adequate and timely allocations of land to investors so that their activities are less or not frustrated all these are intended to entice the investors in the establishment of production plants for the generation of exports.