Agricultural exports and economic growth in Uganda

Abstract

Agriculture is the backbone of the Uganda’s economy as it contributes 24 percent of the country’s GDP, employs over 72 percent of the population and accounts for 31 percent of Uganda’s exports. As such, the agricultural sector is viewed with the greatest potential to generate significant economic growth. This study seeks to examine the influence of agricultural exports on economic growth in Uganda using quarterly time series data sourced from Bank of Uganda and the World Development Indicators of the World Bank for a period between 1994 quarter one and 2020 quarter four. The study used the Augmented Dickey Fuller and Phillips Perron tests to check for the stationarity of variables as well as employing the ARDL bounds approach to cointegration to ascertain the presence of level, short run and long run relationship among the variables in the study. The ADF and the Phillips Perron (PP) unit tests indicated that variables comprised of a mixture of order zero and order one variables which suggests the use of ARDL bounds testing approach to cointegration. The bounds test results confirmed no evidence of a level relation among the variables while the ARDL model indicated the existence of short and long run relationship among the variables in the model. The results revealed that agricultural exports greatly influence economic growth especially in the short run. Overall, the goodness of fit and overall significance of the model showed that the model is highly significant which indicates that variations in economic growth are explained by the regressors considered. The study recommends policies that are geared towards promoting agricultural production and exports with high value addition, promoting productive labor force especially in the agricultural sector as well as providing conducive investment environment particularly for agricultural investors so as to increase agricultural production which in the end, enhances economic growth.