Effect of transport infrastructure investment on economic growth in Uganda

Abstract

Transport infrastructure and energy supply are the biggest drivers behind private investment, job creation, agriculture production and the manufacturing sector in Uganda. This study seeks to explore the effect of transport infrastructure investment on economic growth. It examines how this relationship varies in the short run, long run and the causality between transport infrastructure investment and economic growth. Transport infrastructure investment encompasses both annual government expenditure on new transport construction and the accumulated cost of maintenance and improvement of the existing networks. With the adaptation of the Cobb-Douglas production function, and using quarterly time series data from 2002 to 2016, a Vector Error Correction Model (VECM) was used to estimate the relationship between Uganda’s gross domestic product, road and rail transport infrastructure investment, private sector gross fixed capital formation, labour force participation and the country’s external debt stock.