MJAMR

International Trade and Economic Growth Nexus in Uganda. Empirical Evidence from Kampala District.

Turyahikayo Innocent


Abstract

This study set out to provide evidence for the international trade economic growth nexus in Uganda while using exports, imports and foreign direct investment as proxy variables for the period 1988-2018. It was empirically confirmed that exports imports and foreign direct investment had a strong positive significant relationship with economic growth. Unit root tests were carried out using Augmented Dickey Fuller test and findings showed that all variables were nonstationary at level but were differenced to achieve stationarity. Cointegration was established using Engle Granger Cointegration test citing existence of a long run relationship amongst the variables. The speed of adjustment of the variables to long run was 57 percent within a one-year lag period.77percent of the variations in economic growth were jointly explained by exports, imports and foreign direct investment.23 percent of the variations in economic growth were explained by other variables contained in the error term thus not included in the model. The F statistic was statistically significant hence exports, imports and foreign direct investment have a significant effect on economic growth in the short run. For purposes of policy recommendation, export promotion strategy to boost Uganda's exports is encouraged and provision of tax incentives to domestic firms to boost their productivity. Furthermore, a good investment climate ought to be provided to attract foreign direct investment inflows in Uganda.

Keywords

foreign direct investment imports and exports
Metropolitan Journal of Academic Multidisciplinary Research

Cite This Article

Turyahikayo Innocent (2023). International Trade and Economic Growth Nexus in Uganda. Empirical Evidence from Kampala District. Metropolitan Journal of Academic Multidisciplinary Research, 2(9). https://journals.miu.ac.ug/pages/article.php?article_id=1563

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