Determinants of Export Growth in Uganda (1991-2016)

ABSTRACT 

Agriculture in Ugandan, accounts for about half of GDP, it contributes about 85% of exports, and employs 80% of the work force. Statistics show that the value of traditional exports remained minimal compared to the other sectors of the economy. This study examined factors affecting export performance in Uganda between 1991 and 2016. Secondaiy data were employed using time series to analyze the influence of macroeconomic factors such as Foreign Direct Investment (FDI), Real Exchange Rate (RER) and Terms of Trade (TOT). The study found out that real exchange rate foreign direct investment and terms of trade were significant to export performance. Gross Domestic Product was also found positively related to export growth. However, Inflation Rate was found negatively related to exports. The study concludes that improved export performances for both traditional and nontraditional exports, as well as to diversify export base of the country by formulating good trade policy, attract more Foreign Direct Investment, improve infrastructure and create good business environment. This study also recommended that Uganda’s economy must try to attract more foreign direct investment not only to improve its exports, but also to bring in foreign exchange, capital, technology & other important resources such as market knowledge.

TABLE OF CONTENTS

DECLARATION I

APPROVAL H

DEDICATION iii

LIST OF ABREVIATIONS V

LIST OF VII

TABLE OF CONTENTS VII

CHAPTER 1

INTRODUCTION ~ 1

1.0 Introduction I

1.1 Background to the Study 1

1.1.1 Historical Perspective 1

1.1.2 Conceptual Perspective 4

1.1.3 Theoretical Perspective 5

1.1.4 Contextual Perspective 6

1.2 Problem Statement 7

1.3 Purpose of the Study 7

1.4 Objectives of the Study 7

1.5 Research Questions 8

1.6 Hypotheses 8

1.7 Significance of Study 8

1.8 Organization of the Study

CHAPTER ~ 10

LITERATURE ~ 10

2.0 Introduction 10

2.1 Theoretical Review 10

2.2 The Empirical Evidence~ 13

2.2.1 Relationship between Foreign Direct Investment and Export Growth 14

2.2.2 Relationship between Terms of Trade and Export Growth 15

2.2.3 Relationship between Real Exchange Rate and Export Growth 17

2.2.4 Relationship between Gross Domestic Product and Export Growth 20

2.2.5 Relationship between Foreign Price Level and Export Growth 21

2.3 Research Gap 23

CHAPTER THREE ~ 24

METHODOLOGY~ 24

3.0 Introduction 24

3.1 The Model Specification 24

3.2 Data Sources 26

3.3 Data Analysis 26

3.4 Tests for Normality 27

3.5 Tests for Stationarity 27

3.6 Tests for Cointegration 28

3.7 Diagnostic Tests 29

CHAPTER FOUR ~ 30

4.0 PRESENTATION,

Introduction

ANALYSIS AND INTERPRETATION OF 30

4.1 Descriptive Statistical Analysis of the Variables in the ModelS 30

4.2 Time Series Property of Data/ Unit Root Test 32

4.3 Co-Integration Test Results 34

4.4 Regression Analysis of the variables under study 36

CHAPTER FIVE

DISCUSSIONS, CONCLUSIONS AND RECOMMENDATIONS~~42

5.0 Discussions and Conclusions 42

5.1 Discussion of Findings 42

5.1.1 Effect of Terms of Trade on Export Performance of Uganda 1991-2016 42

5.1.2 Effect of Foreign Direct Investment on Export Performance of Uganda 1991-2016 43

5.1.3 Effect of Real Exchange Rate on Export Performance of Uganda 1991-2016 43

5.2 Conclusion 44

5.3 Recommendations 44

5.4 Limitations of the Study 45

5.5 Areas for Future Studies 45

5.6 Contributions to Knowledge 46

REFERENCES 47

APPENDIX 1: DATA USED IN THE STUDY 50