the impact of population growth on economic growth, evidence from uganda

Description

The study investigated the impact of population growth on Uganda‟s economic growth. It specifically described Uganda‟s population and economic growth trends and analyzed the effect of population as the key independent variable together with control variables that included; gross domestic saving, labour force, foreign direct investment, gross capital formation, human capital and inflation on Uganda‟s GDP growth. Secondary data was extracted from the World Development Indicators as published by the World Bank for the period between 1980 and 2017. Other data used was from documented records of studies carried out by the International Monetary Fund (IMF) and the Bank of Uganda (BOU). The study used the theoretical model of Solow (1957) or neoclassical model as reviewed by Wilson & Briscoe (2004). A log-log regression method was used for analysis together with ECM, co-integration and Granger causality model to determine the study results. The study found out that on average a 10% change in population, holding other factors constant would significantly increase GDP growth by 16.3%. The higher the population, the more likely therefore that more goods are produced. Gross domestic savings rate was found to positively lead GDP growth to increase. An increase in Human capital on average leads economic growth to increase. Similarly, on average, a 10% change in FDI holding other factors constant positively and significantly affects GDP growth rate to increase by 50% holding other factors constant. Inflation rate positively leads GDP growth to increase. The ECM suggested the existence of a long run relationship between Population growth and GDP growth, Co-integration results showed that the previous year‟s errors lead to an adjustment speed of 72% in the current GDP. The results of a pair wise Granger Causality test showed that population growth does Granger cause economic growth in Uganda significant at 10% level and that economic growth does Granger cause population growth significant at 5% level. The study recommends that the government through its financial and economic policy planning organs such as the central bank should take into policy measures to attract and increase, population, human capital, FDI, GCF, labour force inflows and control inflation to enable a good environment for economic growth.