Public Expenditure and Economic Growth in Uganda from 1995-2014

ABSTRACT The main purpose of this study was to establish the influence of public expenditure on economic growth in Uganda from 1995-2014. It was driven by three maj or objectives; To determine the trend of public expenditure from 1995 -2014; To determine the trend of economic growth from 1995-2014; To establish if there is significant relationship between public expenditure and economic growth from 1995-2014. Using time series data from the world bank and Uganda bureau of statistics, both correlational and regression analysis statistical tools were applied to investigate and build a model for explaining the variation in economic growth. The Gross Domestic Product (GDP) representing Uganda’s GDP in Nominal terms is considered as the dependent variable in this study. Public expenditure (independent variable) is divided into three different attributes, for instance, public expenditure on consumption, public expenditure on education and public expenditure on health. The data shows that there have been irregular changes in real gross domestic product (RGDP) for years 1995 to 2014 throughout the nineteenyear period the study was conducted because the RGDP data registered some random increases and decreases within this time. The data further shows that there has been a rather constant variation in the percentage of public expenditure on health.Analysis of the public expenditure data reveals that public expenditure has registered some slight spikes for the lastnineteen years. The data also shows that there has been an irregular and relatively low variation in the percentage of public expenditure on education. The results of the analysis indicate that there exists a negative relationship between Expenditure on health and economic growth. the results also show that there is a positive relationship between expenditure on consumption and economic growth. The data also reveals that the three different attributes to expenditure, for instance, expenditure on consumption, health and education explain only 16.96% of the variation in overall government growth. The study thus recommends that if the government is to spur economic progress through public expenditure, then the most appropriate of doing so should be through consumption. Furthermore, the data shows that although public expenditure, best form of government spending to stimulate the economy, is not a very reliable way of increasing economic activity.

TA BLE OF CONTENTS

DECLARATION i

APPROVAL ii

DEDICATION iii

ACKNOWLEDGEMENT iv

TABLES OF CONTENTS v

LIST OF TABLES vii

LIST OF FIGURES ix

ABSTRACT x

CHAPTER ONE 1

INTRODUCTION 1

1.0 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 7

1.2. Statement of the problem 9

1.3. Purpose of the study 10

1.5. Specific Objectives 10

1.6 Research Questions 10

1.7. Hypothesis 10

1.8. Scope of the study 11

1.9. Significant of the Study 11

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CHAPTER TWO .12

LITERATURE REVIEW 12

2.0. Introduction 12

2.1. Theoretical review 12

2.2. Conceptual review 13

2.3. The trend of public expenditure from 1995 -2014 14

2.4. The trend of economic growth from 1995-2014 16

2.4. Relationship between public expenditure and economic growth 1995-20 14 19

2.5. Research Gaps 25

CHAPTER THREE 26

METHODOLOGY 26

3.0. Introduction 26

3.1. Research design 26

3.2. Data Type and Sources 27

3.3. Data analysis 27

3.4. Ethical consideration 28

3.5. Limitations of the study 28

CHAPTER FOUR 29

ANALYSIS OF RESULTS AND FINDINGS 29

4.0. Introduction 29

4.1. Description of the data 29

4.2. Determining the trend of economic growth from 1995-2014 31

4.3. Determining the trend ofpublic expenditure 33

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4.4. Relationship between public expenditure and economic growth 36

CHAPTER FIVE 40

DISCUSSION, CONCLUSION AND RECOMMENDATION 40

5.0 Introduction 40

5.1. Discussion of results 40

5.1.1. Trend of public expenditure from 1995 -2014 40

5.1.2. The trend of economic growth from 1995-2014 40

5.1.3. Relationship between public expenditure and economic growth from 1995-2014 42

5.1. Conclusion 43

5.2. Recommendations 43

REFERENCES 44

APPENDICES 48

APPENDIX I: TRANSMITTAL LETTER FOR THE ORGANIZATION 48