@article{Lubinga:157593,
      recid = {157593},
      author = {Lubinga, Moses H.},
      title = {Factors Affecting Uganda's Bilateral Trade Flows: An  Application of the Gravity Flow Model},
      address = {2009-06},
      number = {634-2016-41453},
      pages = {87},
      year = {2009},
      abstract = {Uganda is a fast growing economy with many sources of  foreign exchange most
especially from agricultural trade  exports. However, no information about Uganda’s
bilateral  trade flows has been documented using the gravity flow  model yet this model
lies at the centre of explaining any  country’s bilateral trade flows. Identification of
Uganda’s  bilateral trade flows can suggest a desirable free-trading  partner and conjecture
the volume of a missing trade or  unrealized bilateral trade flows. Although Muhammed
and  Andrews (2008) have employed the gravity flow model in  Uganda, no work has
been done to assess the determinants of  Uganda’s bilateral trade flows and potential.
However, a  detailed understanding of Uganda’s bilateral trade flows  would provide an
additional practical framework for  derivation of informed trade policy decisions to
improve  the country’s trade regime. It is against this background  that the Augmentedgravity
flow model was employed to study  Uganda’s total bilateral trade flows and her
trade  potential. The main objective of this study was to explore  the determinants of
Uganda’s total bilateral trade flows  and her predicted trade potential. Specifically,(i)  to
determine the factors that influence total bilateral  trade flows between Uganda and her
trade partners, (ii) to  predict Uganda’s bilateral trade potential and performance  and iii)
to determine Uganda’s degree of trade integration  with her major trade partners.
Time series data of Uganda  and her major trading partners (Switzerland,  Netherlands,
Belgium, UK, France, South Africa and Kenya)  were used for the period 1970 -2006.
The study employed  real GDP, Distance, real exchange rate volatility, real  exchange
misalignment, membership to COMESA, membership to  the East African Community
(EAC) and having had a common  colonial master as the explanatory variables with  259
observations. Feasible Generalised Least Squares (FGLS)  estimation, Relative difference
x
(Rd) and Absolute  difference (Ad) indices, as well as the ratio of actual to  potential total
bilateral trade flows were the analytical  tools employed to achieve the set objectives.
Empirical  findings reveal that Uganda’s total bilateral trade flow is  positively influenced
by Uganda’s real GDP, real GDP of her  trading partners, membership to COMESA,
membership to the  EAC and having had similar colonial masters. On the other  hand,
distance, population of Uganda and that of her trade  partners, real exchange rate
volatility and misalignment  showed a negative influence on Uganda’s total bilateral  trade
flows. Generally, Uganda has a good trade performance  and can easily be integrated in
trade. However, there is  still need to promote export trade and invest generously  in
public infrastructure among others in order to improve  her trade performance. Results
also reveal that Uganda has  a high degree of trade integration (111.09 percent) with  most
of her trading partners but she cannot easily  integrate with UK and France markets
specifically. The  lower level of trade integration with UK and France is  associated with
the high non-tariff trade barriers as well  as large distance between Kampala and the
respective  capital cities.},
      url = {http://ageconsearch.umn.edu/record/157593},
      doi = {https://doi.org/10.22004/ag.econ.157593},
}