Impact of public expenditure on economic growth in Uganda for the period of 1990 – 2020

Abstract

This study investigates the impact of public expenditure (disaggregated into capital and recurrent) on economic growth in Uganda using time series data for the period 1990-2020. The paper employs the Autoregressive Distributed Lag (ARDL) model. The study employs the unit root test, Philips Perron and the co-integration analysis. The key findings of the study are that development expenditure has negative and significant impact on economic growth both in the long run while recurrent expenditure has a positive significant impact on economic growth both in the long run. Further in the long run, growth of capital stock and trade openness are positively significant while inflation is negatively significant to economic growth. The study recommends that government should reduce development expenditure and increase recurrent expenditure. Further the share of the development expenditure should focus on meaningful projects that have a direct bearing on the citizen’s welfare. Government should also increase the spending patterns of recurrent expenditure through careful reallocation of resources toward productive activities that would enhance human development in the country.