Determinants of Export Performance in Uganda (1989-2020)

Abstract

The study is set to investigate the factors determining export performance in Uganda. The specific objectives of the study are to examine the relationship between Foreign Direct Investment net inflows, inflation, Real Exchange Rate and export performance from 1989 to 2020. The study adopted a longitudinal design and the analysis was based on stationarity tests, co-integration tests, ordinary least squares tests and finally diagnostic tests. The study results show that there is a significant relationship between foreign direct investments and export performance. Secondly, it was found that there was a relationship between inflation and export performance. The study also observed a significant relationship between inflation and export performance. Finally, it was found that the real exchange rate affects export performance. The study concludes that the development of foreign direct investments induces export performance; hence export performance can be generated through foreign direct investments. The study also concludes that the state of inflation reduction can be a general development of the export performance for the countries, while the real exchange rate is a key determinant for the export performance in Uganda from 1989 to 2020. The study recommends that there is a need for regulations and monitoring to ensure the proper form of foreign businesses in the country together with enhancing the management situation for the management of the business. Secondly, the policies intended to reduce inflation are needed to increase the capacity of businesses to operate and attain mechanisms for the reduction of inflation. Finally, the government should also embark on strong fiscal policy to reduce unnecessary money supply which can lead to inflation that negatively impacts on economy & reduces economic growth.