Fiscal deficit and economic growth in Uganda
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Date
2011-09
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Kampala International University,College of Economics and Management
Abstract
The study focused on fiscal deficit and economic growth in Uganda and it
considered data for the last two decades (1992-2010). It was guided by the following
research objectives; the level of fiscal deficit in Uganda, the level of economic growth in
Uganda and the relationship between fiscal deficit and economic growth in Uganda. The
study undertook descriptive correlation research design that largely suits quantitative
and qualitative research design and was ExPost facto. However, the study was cross
sectional because it undertook a short period of time and cluster random sampling
procedure was also used. The data was analyzed using percentage distribution tables
and the strength of the relationship between the variables was established using
regression analysis.
The findings revealed that since 1992 to 2010 the level of fiscal deficit has
increased and this is explained by increasing budget deficit and that the level of
economic growth has also been increasing due to increased public and private
investments.
The findings further revealed that a unit change in fiscal deficit influences
economic growth by 13.3268 billion and that when fiscal deficit is zero (0), economic
growth will have a constant which is the y-intercept= -407.4699, results from Pearson
correlation reveals that there exists a strong relationship between fiscal deficit and
economic growth since the correlation between the variables is O.9403(94%). The
findings further revealed that Government spending is the major determinant of fiscal
deficit and economic growth in Uganda and that fiscal deficit and expenditures are
highly and internally correlated at 0.9518(95.18%).
It was concluded that at univariate level fiscal deficit leads to an increase in
economic growth and at bivariet level the results are in agreement with John Maynard
Keynes’ theory of Government spending.
The recommendations of the study were; Uganda must decisively address the
increasing petty corruption, Uganda must also maximize social benefits through massive
investment and prudent macro economic management
Description
A Thesis Presented to the School of Postgraduate Studies and Research Kampala International University Kampala, Uganda in Partial Fulfillment the Requirements for the Degree Master of Arts in Economics
Keywords
Growth, Fiscal, Deficit, Economic