TITLE:
Time Series Bounds Approach to Foreign Direct Investment, Unemployment and Economic Growth in Uganda
AUTHORS:
Aweng Peter Majok Garang, Kassouri Yacouba, Kacou Kacou Yves Thiery
KEYWORDS:
FDI, ARDL Bounds, Unemployment, Economic Growth
JOURNAL NAME:
Modern Economy,
Vol.9 No.1,
January
11,
2018
ABSTRACT: This is a causality study on Foreign Direct Investment
(FDI), Unemployment and Economic growth in Uganda using time series Autoregressive
Distributed Lag (ARDL) bounds approach based on FDI, unemployment rates and GDP
datasets from 1993 to 2015. Curtailing levels of unemployment and simultaneously sparkling
levels of economic growth are primary macroeconomic objectives of every country.
This study intends to be instrumental in advising alternative policies that aim
at reducing unemployment and sparkling economic growth; one of which is the attraction
of FDI. Literature has no concrete premise for this hypothesis since evidences from
some countries show positive results while others show negative results. Our study
adopts dynamic ARDL bounds approach with efficient and successful record of undertaking
empirical studies of this nature in time series. Using data series obtained from
the world bank, our findings indicate no causalities between the variables considered.
Therefore, there is no sufficient statistical evidence to suggest that FDI plays
significant roles in reducing unemployment and sparkling economic growth. The short-run
and long-run dynamics of the model do not point to any statistically significant
relationships. Based on this specific country-case premise, the study recommends
on the need to revitalize domestic industries and re-strategize FDI comprehensive
policy frameworks to provide competitive edge to domestic firms and attract FDI
in a pace consistent with the growth agenda of local industries.