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| International Trade Nexus Economic Growth In Uganda. Empirical Evidence of Kampala District
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Asiimwe Isaac Kazaara, Dr Ariyo Gracious Kazaara, Dr Arinaitwe Julius
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Abstract:
This research paper aims to provide empirical insights into the intricate relationship between international trade linkages and economic growth outcomes specific to Kampala District, Uganda over the past three decades. As one of the primary destinations absorbing foreign direct investments and concentrating export-oriented manufacturing clusters within Uganda's borders, Kampala's economic fortunes are inextricably tied to the nation's integration within regional and global trading networks. However, despite macro-level studies exploring trade openness impacts on aggregate growth at the national scale, there remains a dearth of evidence parsing out the differential implications according to locale, with Kampala District warranting dedicated investigation due to its strategic positioning at the heart of cross-border commerce flows. To address these knowledge gaps, this study employs longitudinal quantitative analysis of time-series data from 1990 to 2020 compiled by the Uganda Bureau of Statistics as well as qualitative interviews with policymakers and businesses. The research aims to disentangle how fluctuating trends in Uganda's trade volumes, composition and external partnerships influenced Kampala's economic restructuring, sectoral productivity gains, output dynamics and income indicators over time. In addition to trade, control variables accounting for infrastructure investments, foreign capital inflows, inflationary environment and terms of trade are utilized to isolate the unique contributions of international commerce pathways. The findings provide valuable insights for policymakers seeking to bolster export competitiveness and maximize spillover multipliers from Kampala's concentration of trade-led industries. The results indicate that Kampala District underwent remarkable industrialization and structural transformation closely associated with Uganda's rising globalization and regional economic cooperation. International trade openness significantly and positively impacted local GDP growth even after controlling for other growth determinants Exports exhibited a perfect direct correlation with itself (r = 1.0). GDP demonstrated a moderate positive correlation (r = 0.409) with exports. Using a two-tailed hypothesis test with a significance level of ? = 0.01, this correlation was deemed highly statistically significant (p = 0.000). Since the p-value is less than the critical value of 0.01, the null hypothesis of zero correlation in the population can be rejected. Nonetheless, challenges related to rising import competition, congestion costs and small firms' inability to access global opportunities point to the need for complementary policies enhancing competitiveness, infrastructure, skills and financing.
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