Government expenditure and economic growth in Uganda

Abstract

The paper observes that rising government expenditure has not translated to meaningful development as Uganda still ranks among world’s poorest countries. In an attempt to investigate the effect of government expenditure on economic growth, an Auto Regressive Distributive Lag model (ARDL) was employed. The results reveal that Foreign Direct Investment (FDI), Development expenditure (DEVE) and Inflation (INF) have a positive effect on economic growth in the long run while in the short run Foreign direct investment (FDI) and Inflation (INF) have a negative effect on economic growth. The recommendations include; increase in development expenditure through increase in loans and advances, loans for social and community development services and loans for economic service which help in the social and economic development of the country.