Determinants of Uganda’s Export Performance: A Gravity Model Analysis
International Journal of Business and Economics Research
Volume 4, Issue 2, April 2015, Pages: 45-54
Received: Feb. 16, 2015; Accepted: Mar. 2, 2015; Published: Mar. 6, 2015
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Henry Tumwebaze Karamuriro, Department of Economics and Statistics, Kyambogo University, Kampala, Uganda
Wilfred Nahamya Karukuza, Uganda Business and Technical Examinations Board, Kampala, Uganda
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Exports play an important role in Uganda’s economy, influencing the level of economic growth, employment and the Balance of Payments. Uganda has initiated several trade policy reforms aimed at promoting the export sector. However, Uganda’s share in total world exports is still very low. Given the central role of exports in the economy, it was important to identify the plausible factors affecting export flows between Uganda and its trading partners. Thus, this paper examines the factors affecting Uganda’s exports using an augmented gravity model of trade. The panel dataset used was for the period 1980 to 2012. The results suggest that Uganda’s GDP, importer’s GDP, importer’s GDP per capita, per capita GDP difference between Uganda and its trading partners, real exchange rate, official common language, and contiguity had a positive and statistically significant effect on Uganda’s exports. The study further, shows that the formation of COMESA and EAC had a significant positive effect on Uganda’s exports. On the other hand, Uganda’s GDP per capita and distance between Uganda and its trading partners had a negative effect on Uganda’s export flows. These results are important for trade policy formulation in order to ensure that Uganda’s export potential is exploited so as to enhance economic growth.
Gravity Model, Fixed Effects Regression, Random Effects Regression, Instrumental Variables GMM Regression, Exports
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Henry Tumwebaze Karamuriro, Wilfred Nahamya Karukuza, Determinants of Uganda’s Export Performance: A Gravity Model Analysis, International Journal of Business and Economics Research. Vol. 4, No. 2, 2015, pp. 45-54. doi: 10.11648/j.ijber.20150402.14
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