Input Factors Influencing Economic Growth in Uganda (1990-2023)

Abstract

This study examined determinants of economic growth in Uganda (1990–2023) by focusing on gross capital formation, education expenditure, and population increase, using annual time-series data from 1990 to 2023 and applying the Autoregressive Distributed Lag (ARDL) model to capture both short-run and long-run relationships. The findings revealed that gross capital formation had a positive long-run coefficient (1.016) but its influence was statistically insignificant (p = 0.123), with short-run coefficients also found to be non-significant (p > 0.70), indicating that capital accumulation has not been a decisive contributor to Uganda’s growth. Education expenditure, considered as a measure of human capital, displayed statistically significant positive effects in both the short run (coefficient = 0.352, p = 0.004) and the long run (coefficient = 0.491, p = 0.036), confirming the essential role of human capital in enhancing economic growth. By contrast, population increase exerted statistically insignificant influence in the short run (−0.383, p = 0.509) and the long run (1.321, p = 0.465), suggesting that demographic expansion has not directly translated into economic growth without accompanying structural transformation. The ARDL estimations established education as the most influential factor, while capital formation and demographic change showed weak or negligible contributions. Model diagnostic tests confirmed robustness, with no heteroskedasticity, no serial dependence, and no non-normality, while the error correction coefficient (–0.211, p = 0.026) demonstrated convergence toward long-run equilibrium. The study concludes that prioritizing education investment is essential for Uganda’s sustainable growth, recommending that government increase funding to the education sector, strengthen institutional systems to improve the productivity of capital, and design demographic strategies that transform rapid population expansion into a long-term economic advantage.