The effect of coffee exports on economic growth in Uganda

Abstract

The study investigates the effect of coffee exports on economic growth in Uganda. The study employed time series data for the period 1987-2021 with Auto-regressive Distributed Lag (ARDL) using data from Uganda Coffee Development Authority (UCDA) and World Bank data base. The Gross capital formation and exchange rate were stationary at level [I(0)], while Gross domestic product, coffee export, labor force, and non-coffee exports were stationary after the first difference [I(1)]. The co-integration test was conducted to ensure the existence of a long-run relationship using the bounds test. The variables confirmed the existence of co-integration, and the ARDL was estimated to extract both short-run and long-run relationships. The findings of the study revealed that coffee exports increase economic growth, depreciation of the currency leads to higher economic growth, and gross capital formation has a long-term positive and significant impact on economic growth. The study recommends that government of Uganda should implement policies to stimulate the coffee sector by conducting extensive research into resistant varieties to improve the quality of coffee to fetch an even higher price on the world market.