Infrastructure Investment and Economic Growth in Uganda (1985-2016)

ABSTRACT 

The purpose of the study was to establish the effect of infrastructure investment on economic growth of Uganda. The objectives were to examine the effect of health infrastructure investment on economic growth. To examine the effect of road infrastructure investment on economic growth and to establish the effect of educational infrastructure investment on economic growth. The study was conducted based on time series data for the period of 1985-2016, the data was attained was analyzed using different tests among which was the fully modified OLS based on regression. The study findings reveal that health, road and education expenditures had a significant effect on economic growth of Uganda Based on the findings, the study concludes that the infrastructural investments have had a positive effect on economic growth of Uganda from 1985 to 2016. The study results provided that the health infrastructure investments had a significant effect on economic growth of Uganda while road infrastructure had a significant effect, it is concluded that the low level of health investments contribute to economic growth. It is also concluded that the road infrastructure has generated or affected the economy; these could be due to high roads investments in the country. On the third objective the education infrastructure has a low effect on economic growth of Uganda, therefore conclude that the there is low level investments of the health systems through the budgets of the country to enhance the functionality of the country. The study recommend that government need to refocus on investing more in the health systems in order to increase the system functionality and have it vibrant to generate the economic growth improvement for the country, there is need for more concerted efforts in improving the state of the health systems through increasing personnel. There is need for a refocus on the systems of the country to enable it generate values for the economy and enhancing the economic growth for the country. There is need for streamlining the policy on education to make it more skillful so as to encourage job creators for economic development.

TABLE OF CONTENT

DECLARATION ............................................................................................................................. i

APPROVAL ................................................................................................................................... ii

DEDICATION...............................................................................................................................iii

ACKNOWLEDGEMENTS........................................................................................................... iv

ABSTRACT................................................................................................................................. viii

CHAPTER ONE............................................................................................................................. 1

INTRODUCTION .......................................................................................................................... 1

1.1 Background of the study ....................................................................................................... 1

1.1.1 Historical perspective......................................................................................................... 1

1.1.2 Theoretical perspective ...................................................................................................... 3

1.1.3 Conceptual perspective ...................................................................................................... 4

1.1.4 Contextual Perspective....................................................................................................... 5

1.2 Statement of the problem ...................................................................................................... 7

1.3 Purpose of the study .............................................................................................................. 8

1.4 Objectives of the study.......................................................................................................... 8

1.5 Research Questions............................................................................................................... 9

1.6 Hypothesis............................................................................................................................. 9

1.7 Scope of the Study................................................................................................................. 9

1.7.1 Geographical Scope............................................................................................................ 9

1.7.2 Content Scope .................................................................................................................... 9

1.7.3 Time Scope......................................................................................................................... 9

1.8 Significance of the Study ...................................................................................................... 9

CHAPTER TWO .......................................................................................................................... 11

LITERATURE REVIEW ............................................................................................................. 11

2.0 Introduction ......................................................................................................................... 11

2.1. Theoretical Review ............................................................................................................ 11

2.2 Empirical review ................................................................................................................. 15

2.2.1 Effect of health infrastructure investment on economic growth ...................................... 15

2.2.2 Effect of road infrastructure investment on economic growth......................................... 19

2.2.3 Effect of education infrastructure investment and economic growth .............................. 24

2.3 Infrastructure Investments and economic growth ............................................................... 29

2.4 Research Gaps..................................................................................................................... 34

CHAPTER THREE ...................................................................................................................... 35

METHODOLOGY ....................................................................................................................... 35

3.0. Introduction ........................................................................................................................ 35

3.1 Research design................................................................................................................... 35

3.2 Model Specification ............................................................................................................ 35

3.3 Acquisition of data .............................................................................................................. 37

3.4 Data analysis ....................................................................................................................... 37

3.4.1 Descriptive Analysis ........................................................................................................ 37

3.4.2Jarque -Bera Tests............................................................................................................. 37

3.4.3 Hetero scedasticity Test ................................................................................................... 38

3.4.4 Unit roots test ................................................................................................................... 38

3.4.5 The Augmented Dickey-Fuller Tests............................................................................... 38

3.5.6 Phillip Perron Unit test..................................................................................................... 39

3.5.7 Co-integration Analysis.................................................................................................... 39

3.5.8 Johansen Co-Intergration ................................................................................................. 40

3.6. Diagnostic Tests................................................................................................................. 40

3.6.1 Normality Test.................................................................................................................. 40

3.8 Ethical Considerations......................................................................................................... 41

CHAPTER FOUR......................................................................................................................... 42

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA .................................... 42

4.0Introduction .......................................................................................................................... 42

4.1 Descriptive statistical analysis of the variables in the model:............................................. 42

4.2 Time Series Property of Data (Stationarity tests)................................................................ 43

4.3 Co-integration Analysis. ..................................................................................................... 45

4.4 The effect infrastructure investments on economic growth of Uganda .............................. 48

4.4.1 Regression Analysis of the variables under study............................................................ 48

4.5 heteroscedasticity test.......................................................................................................... 53

4.5.2 heteroscedasticity test....................................................................................................... 53

4.5.3 heteroscedasticity test....................................................................................................... 54

4.6 Diagnostic Tests.................................................................................................................. 54

4.6.2 Test for Serial correlation................................................................................................. 55

CHAPTER FIVE .......................................................................................................................... 57

DISCUSSION OF FINDINGS, CONCLUSION AND RECOMMENDATIONS ...................... 57

5.1 Introduction ......................................................................................................................... 57

5.1 Discussion of Findings........................................................................................................ 57

5.1.1 The Effect of health infrastructure investments on economic growth.............................. 57

5.1.2 The Effect of road infrastructure investments on economic growth................................. 58

5.1.3 The Effect of education infrastructure investments on economic growth ........................ 59

5.2 Conclusions......................................................................................................................... 60

5.3 Recommendations............................................................................................................... 60

5.4 Areas for Further Research ................................................................................................. 61

REFERENCES ............................................................................................................................. 62

Appendix i: Data for Analysis ...................................................................................................... 71