Uganda's revealed comparative advantage: the evidence with the EAC and China

The paper examines the comparative advantage of Uganda’s exports to the East African Community (EAC) partner states, and how it has evolved during the implementation of the EAC treaty. In addition, the paper seeks to identify commodities that Uganda should specialize in as a basis to enhance the ability to benefit from the special preferential treatment extended to Uganda by China. The paper applies various indices in the measurement of Uganda’s Revealed Comparative Advantage (RCA) on all products at Harmonised System (HS4)-digit product levels. The HS4-digit product level data was obtained from World Integrated Trade Solution (WITS) UNCTAD COMTRADE database. The empirical evidence of Uganda’s comparative advantage in this context is largely dependent on the individual country under consideration. However, it is evident that Uganda’s list of commodities for exports to the EAC partner states is rapidly expanding and the RCA has increased especially during the implementation of the Customs Union. This is plausibly explained by the removal of internal tariffs along Uganda’s borders with the EAC partner countries and the adoption of a common external tariff. The paper therefore recommends that the identified list of commodities with RCA should be the basis for strategically informing the Uganda industrialization strategy within the context of further EAC integration. Uganda has RCA in only 234 product lines from the list of 4,401 HS 6-digit level disaggregation, suggesting that Uganda will minimally benefit on the basis of revealed comparative advantage. As an alternative, Uganda should explore policy options that could address supply constraints in a bid to increase the range of products Uganda could export to China, as well as the regional Partner States