Foreign direct investment and economic growth in Uganda (1986- 2016)
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Date
2019-04
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Publisher
Kampala International University, College of Economics and Management
Abstract
Study used multivariate vector auto regressive model (VAR) to investigate the impact of foreign direct investment (FDI) on economic growth, and assess the determinants of FDI inflows in Uganda for the periods between 1986 and 2016. Interpretations of results are based on Granger Causality and innovation accounting (variance decomposition and impulse response functions). The study finds that international capital flows are of great importance in stimulating economic growth in Uganda. Results further revealed that the determinants of economic growth are foreign direct investment(FDI), human capital, infrastructure, trade openness The study detected three different channels through which FDI inflows impacts on economic growth in Uganda. The
First one is direct transmissions from FDI to GDP growth. The second channel is indirectly through domestic investments and by multiplier process, higher level of economic growth is generated. The third channel is through exports thereby yielding export-led growth. macro economic stability through proper policies among others all these will attract FDI’s. The government should however put in place measures to limit FDI’s from coming along with experts from their home countries but rather employ the local people this will reduce problems of retrenchment or lay off some workforce that comes along with privatization. This will also will
also solve the problem of limited skills and lead to skills improvement among the people as well as reduce unemployment. There is adequately need for an adequate policy on the development and management of the FDIs in order to avoid the negative effect of some trade of FDI nature, regulations and monitoring is adequately needed to ensure proper form of the foreign businesses [n the country together with enhancing the management situation for the management of the business for economic growth.
Description
A dissertation submitted to the college of economics and management in partial fulfillment of the award of Master of Economic Policy and Planning of Kampala International University
Keywords
Foreign, Direct investment, Economic growth, Uganda