Uganda's Bilateral Trade Flows Explained Using the Gravity Flow Model

Uganda is a fast growing economy with much foreign exchange realized from exportation of agricultural produce. A detailed understanding of Uganda's bilateral trade flows provides an additional practical framework for derivation of informed trade policy decisions to improve the country's trade regime. Thus, the Augmented-gravity flow model was employed to study Uganda's total bilateral trade flows and her trade potential. Objectively, the study explored the determinants of Uganda's total bilateral trade flows, predicted trade potential and performance, and determined the degree of trade integration with Uganda's major trade partners. Panel data for 37 years of Uganda and her major trading partners were used. Feasible Generalised Least Squares estimation, Relative difference and Absolute difference indices, and the ratio of actual to potential total bilateral trade flows were employed. Real GDP, real GDP of her trading partners, membership to COMESA, membership to the EAC and having had similar colonial masters influence bilateral trade flows in Uganda. Uganda has a good trade performance and easily be integrates in trade.