Solow-swan model for the analysis of the effect of foreign direct investments in Ugandan Economic Growth

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Kampala International University, College of Economics and management
Reports that global foreign direct investment (FDI) inflows grew from $23 billion in 1975 to $1.95 trillion by 2017. Lower-middle income economies have seen a significant increase in foreign direct investment (FDI) inflows as well as a rise in growth rates over the past few decades. At the aggregate level, GDP growth for lower-middle income economies was strong over the past four decades. In 1975, GDP for these economies was just 311 billion dollars. But by 2017, this figure had grown to 6 trillion dollars. FDI accounted for 0.37% of GDP in 1975 and 1.94% of GDP in 2017. In 2017, upper-middle income economies received three times more foreign direct investment (FDI) than lower-middle income economies, but the annual growth rates were similar. There is a question of whether foreign direct investment (FDI) stimulates economic growth in lower-middle income economies, and to what extent. This is an issue of interest because it has implications for how these economies can develop. There is some evidence that FDI does stimulate economic growth in lower-middle income economies. This is likely because it makes these economies more productive and efficient. However, this effect is not always positive. Therefore, it is important to consider the effects of FDI on the economy as a whole. Generally, FDI appears to be a valuable tool for growth in these economies. The purpose of this paper is to contribute to the ongoing debate about whether foreign direct investment (FDI) has a positive or negative effect on economic growth in lower-middle income economies with data more up to date.
A research report submitted to the school of mathematics and computing in partial fulfillment of the requirements for the award of Master of Science in statistics of Kampala international University
Solow-swan model, Foreign direct investments, Economic Growth, Uganda