Quarterly time-series study links trade terms with Uganda’s economic growth

Uganda’s terms of trade were positively associated with economic growth in a study of 128 quarterly observations from 1993Q1 through 2024Q4, although the long-run relationship was only marginally significant. Researchers estimated a contemporaneous short-run coefficient of 0.1571 for terms of trade, with a p-value of 0.019, while the long-run coefficient was 0.2497 with a p-value of 0.052. The latter result was significant at the 10% level but not at the conventional 5% level, indicating that the evidence for a persistent relationship was less decisive than the within-quarter estimate.

The empirical analysis used autoregressive distributed lag bounds testing, supplemented with Granger causality tests, diagnostic checks and robustness analyses. Its stated objectives were to determine whether terms of trade Granger cause economic growth, assess short- and long-run effects, and evaluate four control variables: inflation, exchange rate, trade openness and investment. The one-quarter lagged terms-of-trade effect was not statistically significant.

Trade openness was associated with stronger growth in the preferred specification. A 1-percentage-point increase in trade openness was associated with an approximately 0.67-percentage-point increase in GDP growth in the long run. Inflation had a negative, statistically significant long-run effect on growth, while the exchange rate and investment did not exhibit significant long-run effects in that model.

The analysis also included an error-correction model, which estimated that approximately 49.8% of disequilibrium was corrected within one quarter. Diagnostic results supported the reported stability of the model: residuals were normally distributed, and the analysis found no serial correlation or heteroskedasticity. The researchers described the findings as showing that terms of trade play a moderate role in Uganda’s economic growth and identified trade openness and macroeconomic stability as key determinants in the estimated relationships.

They also proposed export diversification, including participation in the East African Community and the African Continental Free Trade Area, as policy implications.

Subject of Research: Empirical analysis of terms of trade and economic growth in Uganda from 1993 to 2024

Article Title: Empirical analysis of the effects of terms of trade on economic growth in Uganda (1993–2024)

Article References: Ogenrwot, R., Hassan, W., & Tugume, J. P. (2026). Empirical analysis of the effects of terms of trade on economic growth in Uganda (1993–2024). Discover Sustainability. https://doi.org/10.1007/s43621-026-05084-7

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DOI: 10.1007/s43621-026-05084-7

Keywords: Uganda, economic growth, terms of trade, time-series analysis, ARDL bounds testing, Granger causality, trade openness, inflation, error-correction model, quarterly data, Empirical, analysis