Assessment of the impact of public investment in human capital development on economic growth in Uganda

Abstract

The purpose of the study is to perform a time series analysis to determine the impact of investment in human capital on Economic growth in Uganda from 1990 to 2022. Data used was got from the World Development Indicators (WDI) the study is guided by three objectives, to determine the impact of investment in Health on economic growth in Uganda, to assess the impact of investment in education on economic growth in Uganda; To determine the Impact of external health funding on economic growth in Uganda. To ensure reliability of the data in estimating the models, the unit too test was done using Augmented Dickey-Fuller (ADF), and the time series was found to be stationary. The data was not serially correlated, multi collinearity was not severe and the series were normally distributed making it reliable to guide decisions. The findings show that there is a weak positive relationship between the GDP spent on health and the annual GDP growth in Uganda (r=0.161). the study further found that there is a weak positive relationship between the GDP spent on education and the annual GDP growth in Uganda (r=0.111), there was a weak negative relationship between the external health funding and the annual GDP growth in Uganda (r = -0.315). The study found that there a moderate negative relation between unemployment and GDP growth (r=-0.4). the study found a moderate positive relationship between inflation and GDP growth (r=0.52). The study concluded that investment in heath positively impacts on economic growth of any country, the investment in education positively impacts on economic growth of any country, external funding to health negatively impacts on economic growth of any country. The study recommended that the ministry of finance should prioritize investment in health as a strategy to improve the quality of its human capital and hence its productivity and GDP growth; the ministry of finance should prioritize investment in education as a strategy to improve the quality of its human capital through skilling and hence its improved innovation and productivity resulting into GDP growth. There should be reduced external borrowing if the economy is to grow