Rainfall distribution and economic growth in Uganda

Abstract

The relationship between rainfall distribution and economic growth is paramount in studies assessing growth in developing countries. The study is based on the Cobb- Douglas production function where rainfall is taken as one of the inputs in the production function. For Uganda, rainfall is a key variable, particularly in agriculture, which employs over 70% of the population and contributes significantly to GDP. Variability in rainfall directly impacts agricultural productivity, which in turn reflects greatly on economic growth. Findings indicate that rainfall’s impact on GDP growth is compounded by interactions with other factors, such as capital formation , human capital participation rate and temperature changes, emphasizing the importance of adaptive strategies to mitigate economic disruptions caused by environmental factors. Descriptive statistical analysis reveals a strong correlation between rainfall levels and GDP growth, further confirmed by unit root tests for stationarity, which underscore the persistence of rainfall’s effects over time. Notably, results from normality tests for variables such as temperature and capital formation suggest that these factors moderate the impact of rainfall on economic stability. The Error Correction Model demonstrates that Uganda’s economy exhibits rapid adjustment rates to restore equilibrium following rainfall shocks, underscoring the vulnerability of economic growth to climatic variability. The findings show that while rainfall does not show a strong short-term effect on GDP, its long- term relationship with GDP is weakly negative. This suggests that excessive rainfall (e.g., flooding or erratic rainfall patterns) could hinder economic growth, especially in agriculture, which is a significant sector for Uganda. However, since the relationship is weak, other external factors like GCF and labor force may also play critical roles in shaping the impact of rainfall. Based on the findings, several policy recommendations are proposed for example the enhancing of climate resilience through developing and implementing climate-smart agricultural practices to mitigate the negative effects of erratic rainfall patterns. Keywords: Economic growth, Error Correction Model, Uganda