Foreign direct investment and economic growth in Uganda (2002-2011)
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Date
2014-02
Authors
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Publisher
Kampala International University, College of Economics and Management
Abstract
The study is focused on Foreign Direct Investment and economic growth (measured by GDP) in Uganda (2002-2011), the study employed time series survey data since it examined data for a short time
Its objectives were; to establish the trend of Foreign Direct Investment in Uganda
(2002-2011, to establish the trend of Economic growth of Uganda ((2002-2011), and to investigate the relationship between Foreign Direct Investment and Economic growth in Uganda (2002-2011).
The hypothesis of the study was there is no significant relationship between Foreign Direct Investment and Economic growth in Uganda. Time Series analysis such Correlation analysis, regression analysis mechanisms were used.
The trend of Foreign Direct Investment and Economic growth showed a general increase. Using the correlation, regression approach, there was a strong positive correlation between Foreign Direct Investment and Economic growth(r=0.8202) there was also significant relationship between Foreign Direct Investment and Economic growth at 0.05 level of significant.
In conclusion therefore both Foreign Direct Investment and Economic growth has a general increase, there is a positive relationship between Foreign Direct Investment and growth in Uganda which agreed with Njimaheta (2009),Makiiet a~ (2004) and Borezstein (1999) study on Foreign Direct Investment and Economic growth this has implied that Foreign Direct Investment play a very Important role in economic growth of Uganda.
The trend in Foreign Direct Investment implies that as the interest rate reduces, foreigners will be encouraged to set up industries and the reverse is true. The study was guided by the cost of capital theory (Forgha 2009), since developing country like Uganda cannot foster economic growth without Investment. Finally Uganda should embark much on the industrial set up since this employs a large number of people.
Description
A Research Report Submitted to the College of Economics and Management Sciences in Partial Fulfillment of the Requirements for the Award of a Bachelor’s Degree in Economics of Kampala International University
Keywords
Foreign direct investment, Economic growth, Uganda