The relationship between international trade and economic growth in Uganda (1990-2021)

Abstract

The study investigates the relationship between international trade and economic growth in Uganda with imports and exports as the measure of trade. Between 1990 and 1995, Uganda implemented liberalization policies, both externally and domestically, aiming at boosting both trade and economic growth. To examine this relationship, the study used time series data for a period of 32 years ranging from 1990-2021 and all the variables used are obtained from the World Banks’ World Development Indicators (WDI). Augmented Dickey Fuller and Phillip-Perron root tests were executed to ascertain the order of integration, indicating a mix of I (0) and I (1) integration. Given this mixed order, Autoregressive Distributed Lag (ARDL) was employed, revealing that exports and secondary school enrolment exert a significant and positive impact while imports and gross capital formation has a negative impact on economic growth. The study's findings show a positive relationship between the exports and economic growth and recommends the government to put in place measures such as ensuring bilateral and multilateral agreements by negotiating and entering into trade agreements with other countries that can open up new markets and reduce trade barriers. Further, provide export financing and credit support, ensure infrastructure development, skills development and training.