Predicting the Growth Rate of Uganda Economy Using Foreign Trade Flow on Grains and Beverages
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Date
2024
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Abstract
This study explores the impact of foreign trade flows on Uganda's economic growth from 1990 to 2023, focusing on key export commodities, including grains (wheat, rice, maize) and beverages (coffee, cocoa, tea). A stationarity assessment using unit root tests showed that cocoa, rice, coffee, and economic growth data were stationary at level, while wheat, tea, and maize required differencing to achieve stationarity. Multicollinearity analysis confirmed the absence of significant multicollinearity among the variables, allowing for reliable regression modeling. Regression models were fitted to quantify the relationship between these export flows and economic growth. The results revealed that the overall models demonstrated weak statistical significance, though individual components like rice, maize, and tea-cocoa showed notable effects. Among the models, the ARDL Grains, Beverages Interactions, and Economic Growth model was identified as the best predictor, with an AIC of 3.202 and a moderate RMSE of 0.560, suggesting a reasonable balance between model accuracy and complexity. The study concludes that; while grains and beverage exports have a moderate positive impact on Uganda's economic growth, the interactions between these exports require further model refinement for improved predictive performance