Analysis of the Effect of Direct Foreign Investment on Economic Growth and Development in Uganda 1990–2024
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Date
2024-09-30
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Uganda Christian University
Abstract
The research analyzed the impact of FDI on Economic Growth and Development in Uganda, using data from 1990 to 2024. The objectives of the study are: to investigate the current level of FDI inflow and recent trends in Uganda, to ascertain the motives and factors underlying the flow of FDI, and to determine the impact of FDI on the employees of Uganda. Qualitative is the research design adopted for the study. The research relied heavily on secondary sources of data so as to comprehend the trends, motives, and impacts of FDI on the economy of Uganda. Secondary data included reports obtained from UIA, BoU, World Bank, and scholarly articles targeted towards attaining a deep understanding of the subject matter.The findings from the study showed that; the trends and patterns of FDI in Uganda underpin the rapidly changing face of foreign investments within the country. Despite the fact that Uganda has made available considerable opportunities for FDI over the past three decades, the investment patterns have been asymmetric, both in sectoral distribution and regional impact (Kragelund, 2007). The fact alone that FDI is concentrated in urban centers and in some sectors, such as services, renders inclusive and sustainable economic growth challenging. Moreover, the volatility of FDI inflows, exposed during the COVID-19 pandemic, raised the need to devise an investment strategy more resilient and diversified-one that could stand up against external shocks. These will include factors such as the following: strategic location of Uganda within the East Africa region, which was a key consideration; social and developmental motivations; abundant natural resources, especially in agriculture and extractive industries; investment climate and policy environment of Uganda; and global economic trends and strategies of MNCs. The impact of FDI on employment in Uganda indicates that FDI has been a strong driver of employment, basically in the manufacturing, agriculture, and services sectors. There existed a strong positive correlation between FDI and actual employment. This high correlation suggests that with an increase in the FDI inflows, actual employment also tends to increase considerably. Conclusion Essentially, the government of Uganda has to adjust its regulatory framework in a more satisfactory way to attract sustainable FDI.It should be a relatively sound initiative, since it makes the bureaucratic requirements more straightforward and reduces corruption, especially with special incentives to attract investment in less-developed areas. With these initiatives, the government would make sure that FDI contributes more to inclusive economic growth: deals with gaps between regions through quality job creation across the country. In addition, policy orientation toward these sectors is needed, answering to Uganda's long-term development needs-for example, renewable energy and sustainable agriculture.
Description
"This dissertation presents an empirical analysis of FDI's contribution to Uganda's economic growth and development, offering insights for policymakers, investors, and researchers."