Effect of domestic investment on economic growth in Uganda: a time series analysis

Abstract

This study empirically examines the effect of domestic investment on economic growth in Uganda from 1985 to 2022 using the ARDL bounds testing approach. The findings indicated domestic investments exhibit a significant effect on economic growth in both the short and the long run. In addition, the findings revealed that other factors such as government expenditure, money supply, external debt stock, trade openness and domestic credit to sector significantly impact economic growth in Uganda both in the short and long run. The study recommends policies that promote domestic investors by offering subsidies to them. Finally, the government should colossally allocate resources to productive investment projects that are perceived to have multiplier and significant effect on the performance of the economy by investing heavily in infrastructure projects in the form of good roads, increasing the distribution of power (electricity) and water across the country so that the cost of doing business is reduced and economic activities are boosted.