Future growth in Uganda will require a rapid rate of export growth and economic diversification. The best strategy is to use the additional oil revenue and accompanying investments to promote a diversification strategy that is sustainable. To determine how to encourage such a transformation, we draw on a new line of research that demonstrates how development seldom implies producing more of the same. Instead, as countries grow, they tend to move into new industries, while they also increase productivity in existing sectors. In this report, we analyse what those new industries might be for Uganda. These include mostly agricultural inputs, such as agrochemicals and food processing. In addition, Uganda should concurrently develop more complex industries, such as construction materials, that are reasonably within reach of current capabilities and will be in great demand in the context of an oil boom. Here, the fact that Uganda is landlocked and faces high import costs will provide natural protection to the expanding demand in Uganda and neighbouring countries. We conclude with a discussion of the government policies that will support Uganda in developing new tradable industries.
Hausmann, R.; Cunningham, B.; Matovu, J.; Osire, R.; Wyett, K. How should Uganda grow? Effective States and Inclusive Development Research Centre (ESID), University of Manchester, Manchester, UK (2014) 43 pp. ISBN 978-1-908749-29-1 [ESID Working Paper No. 30; ESID Policy Paper No. 2]