Issues in Business Management and Economics
Vol.2 (4), pp. 060-073, April 2014
Article ID BM/014/023. 14 pages
Copyright © 2014 Author(s) retain the copyright of this article. Author(s) agree that this article remain permanently open access under the terms of the Creative Commons Attribution License 3.0 International License
Original Research Article
Is Export-Led-Growth Hypothesis valid in Uganda?A Cointegration and Causality analysis (1960-2010)
Accepted 2 April, 2014
Will Kaberuka*1, Ezrah Trevor Rwakinanga2 and Warren Tibesigwa1
1Makerere University Business School, Uganda.
2Ministry of Finance,Planning and Economic Development,Uganda
*Corresponding Author Email: kaberukawill(at)yahoo.com
The Export Led-Growth paradigm received renewed attention following the highly successful East Asia export-led growth strategy during the 1970s and 1980s and especially when compared to the failure of import substitution policies in most of Africa and Latin America. Since 1998, Uganda adopted the export-led strategy as a means for promoting economic growth and development. Using annual time series data from 1960 to 2010, this study tested the validity of export-led growth under structural changes that have taken place in Uganda during the period under study. The study estimated the model in the statistical procedure of cointegration and Error-Correction Model (ECM). The study also tested causal relationships between total labour force and exports.The study found a long-run and unidirectional relationship from exports to economic growth only in the post trade liberalization model (1988-2010). The study found that trade liberalization had a negative but insignificant impact while total labour force Granger-causes total exports in the post-trade liberalization period only. It is therefore recommended that more effort be concentrated on increasing labour force and hence exports which cause economic growth. Further research is needed to determine the causes of diminishing contribution of exports to economic growth. It is also recommends that further opening of the economy be halted as this was found to retard the growth of the economy.
Key words: Export-led-growth, economic growth, trade liberalization.