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asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
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Published: 06 August 2021

The Relationship Between Foreign Direct Investment Oriented Economic Growth in Uganda: An Empirical Study Based on VAR Model

Nabyonga Barbra, Hina Nawaz

Nanjing University of Science and Technology, China

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

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doi

10.31014/aior.1992.04.03.372

Pages: 90-98

Keywords: Economic Growth, Foreign Direct Investment, Vector Autoregression Model, Uganda

Abstract

The purpose of this paper is to investigate the relationship between Foreign Direct Investment (FDI) and Economic growth as measured by Gross Domestic Product (GDP) over Uganda, from 1980-2018. Vector Autoregressive Model (VAR) and Granger Causality test were used. The results show thatlag 1 is the optimal lag hence bivariate VAR (1) model was used. GDP and FDI exhibits long-term equilibrium since the two-time series are cointegrated in long run. The causality test indicates that there exists a unilateral relationship between FDI and GDP, and FDI causes GDP growth and not vice versa. Understanding these causality links can help in future forecasting of Uganda's economic growth.

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