Determinants of export growth in Uganda (1987-2006)

Abstract

The main objective of the study was to identify the determinants of export growth in Uganda for the period 1987-2006. The study was prompted by the inconsistencies in the findings by various researchers on the determinants of export growth hence the need for a clarification on the plausible determinants of export growth.

The study was conducted using data obtained from African Development Indicators; World Bank tables and the United Nations Statistics Division Common Database. An export supply model used by Musinguzi et al (2000) was adopted for the study. Foreign price level and Foreign Direct Investment were added to Gross Domestic Product, Terms of Trade and Real Exchange Rate, the explanatory variables used in the model adopted.

Foreign price level and Terms of Trade were found to be statistically significant in explaining export growth for Uganda between 1987 and 2006. Interestingly, Foreign Direct Investment, Real Exchange Rate and Gross Domestic Product as per the findings do not significantly affect export growth.

This study recommends that in order to improve export growth, the motive of Foreign Direct Investment should be changed from capturing the domestic market to production for export. 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.