Effect of exports on economic growth in Uganda

Abstract

This study investigates the relationship between exports and economic growth in Uganda from 1990 to 2023. Given the crucial role of exports in driving economic performance, particularly in developing nations, the research examines both the short-term and long-term effects of export on Uganda’s Gross Domestic Product (GDP). Using the Solow Growth Model as a theoretical framework, the study employs time-series data and econometric modeling techniques, including the Autoregressive Distributed Lag (ARDL) model, to analyze key macroeconomic variables like labor force, capital formation, technology, and exchange rates. The findings reveal a positive long-term relationship between exports and gross domestic product (GDP) growth, with a unit increase in exports leading to a 0.446 increase in GDP growth. The study shows a positive relationship between technological advancements, gross capital formation and economic growth, while labour force and exchange rate depreciation have a negative effect on economic growth in the long run. The results provide valuable insights for policymakers aiming to enhance Uganda's export capacity and strengthen its economic resilience including assuring bilateral and multilateral agreements through trade negotiations and agreements to open new markets and lower trade barriers. Furthermore, guarantee infrastructure development, skill development, and training, as well as export financing and credit support to strengthen the competitiveness of export sectors and drive sustainable economic growth. KEY WORDS; Population growth, Economic development