Inflation and economic growth in Uganda 1980-2010
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Date
2011-09
Authors
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Journal ISSN
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Publisher
Kampala International University, College of Economics & management.
Abstract
A research thesis presented to the school of Postgraduate Studies and Research Kampala International University Kampala, Uganda in partial fulfillment of the requirements for the Degree of Master of Arts in Economics
Description
The study was carried out to determine the relationship between the level of inflation and the level of economic growth (growth rate) in Uganda between 1980-2010. The study used the expostfacto research design and descriptive co relational survey design. The researcher also used annual statistical records about inflation rate as measured by consumer price index (CPI) and growth rate. The researcher used purposive sampling strategy in the process of data collection and used record sheets as research instruments in the process of data collection. The~ data was analyzed using the Statistical Package STATA. Pearson’s correlation coefficient (r) was computed to determine the nature of the relationship between the level of inflation and the level of economic growth in terms of growth rate. Regression analysis was also used to determine the strength of the relationship between inflation and economic growth in terms of Gross Domestic Product. The findings of the study were; there is no significant relationship between the level of inflation and the level economic growth in terms of Gross Domestic Product. The coefficient of determination (r2) was 0.11 which meant that inflation only explains ll% of the variation in economic growth. This signifies that, there are other predictor variables that do explain the remaining 89% Of the variation in economic growth such as investment level, employment level among others. The researcher concludes that, inflation is not the only factor that influences economic growth but there are other factors. The researcher recommends that the government of Uganda should put up structural reforms to minimize inflation since it was found to have a negative impact on long run economic growth, the government of Uganda should allocate more funds to the agriculture sector, provide favorable investment climate and give more favors to the local investors, find ways of increasing foreign exchange inflow and minimize foreign exchange out flow for example through setting up both export promotion industries and import substitution industries respectively.
Keywords
Inflation, Economic growth