diversifying its exports out of agricultural commodities into food processing and agro‐processing in general and into the textiles and garments industries and from oil and gas extraction into related chemical products. Ideally the sectors of comparative advantage and comparative disadvantage should be identified at the three or four –digit ISIC levels but, given the relatively large number of such industries, we have to settle for addressing the questions listed here at the two‐digit level so as to keep the analysis tractable.

Among Uganda’s main trading partners in relations to which the country’s comparative advantage industries are identified here are fellow members of the East African Community (EAC). At the moment most of Uganda’s trade within the EAC is with Kenya and Rwanda.<sup>10</sup> For example, Uganda imported about half a billion dollars worth of goods and services from Kenya in 2008 (chiefly in the form of chemical products, steel, aluminum articles, electrical machinery and equipment, garment and textiles, and furniture and appliances) and exported about $150 million in the form of fish, fruit and vegetables, coffee, tea, cereals, cotton, tobacco and raw hides and skins. It exported about $120 million worth of goods and services to Rwanda that year in the form of chemical products, cotton and iron and steel while importing less than $3 million worth of goods and services.<sup>11</sup> The two –digit ISIC industries that the Uganda Export Strategy of 2008‐2012 sees as the country having comparative advantage in are the following (classified by single digit ISIC).<sup>12</sup> In agriculture: (1) crop and animal production, and (2) fishing and aquaculture. In mining: (3) extraction of crude petroleum and natural gas and (4) mining of metal ores. In manufacturing: (5) food and beverages, (6) tobacco Gold accounted for 12 percent of the value of exports while manufacturing exports to DRC, South Sudan, Rwanda and Burundi accounted for 25% of total exports.

> 10 Isaac and Othieno (2011) compute  revealed comparative advantage indices for Uganda vis‐à‐vis a selection of fellow EAC members and China –also a major trading partner‐ that are broadly consistent with the listing of comparative advantage industries as provided here. The list is also consistent with the exporting industries’ potential in Uganda’s current export strategy. Spelt out in Republic of Uganda (2007), the strategy also sees Uganda’s comparative advantage in agricultural exports and their processing but does see scope for diversification into manufacturing especially in textiles and garments and also other areas with neighboring countries as the intended destinations. This very much tallies with the draft EAC industrialization strategy, which also claims that Uganda’s comparative advantage within the Community lies  in “hydro power generation, sugar, steel production, food processing,  small scale beverages, textiles, cement, tobacco, natural gas production, copper mining”.

> 11 These figures are taken from Isaac and Othieno (2011), which also shows Uganda to be a net importer from Tanzania and a net exporter to Burundi importing about $55 million of goods and services from Tanzania in 2008 in the form of textiles and garments, cereal, beverages, and iron and steel) while exporting about $26 million from that country (in the form of live animals, meat, dairy products, coffee, tea, tobacco, chemical and plastics) and $36 million from Burundi from which it imported not much. That same year Ugnada exported less than $15 million to China (in the form of cotton, coffee, leather, oilseeds, fish, timber and minerals) while importing $231 million worth of textile and garments, footwear, furniture, pharmaceuticals and electrical and mechanical appliances.

> 12 Republic of Uganda (2007).

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