Analysis of the Drivers of Service Sector Growth in Uganda
The service sector in Uganda emerged prematurely as the leading driver of economic growth. This was before the country fully industrialised as described under the dual economic development model. Despite the enormous contribution of the service sector to economic growth in Uganda, an empirical analy...
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| Format: | Article |
| Language: | English |
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World Scientific Publishing Co. Pte Ltd.
2023-03-01
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| Series: | International Journal of Empirical Economics |
| Subjects: | |
| Online Access: | https://www.worldscientific.com/doi/10.1142/S2810943023500038 |
| _version_ | 1797672124481011712 |
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| author | Mukoki James Hisali Eria Mukisa Ibrahim |
| author_facet | Mukoki James Hisali Eria Mukisa Ibrahim |
| author_sort | Mukoki James |
| collection | DOAJ |
| description | The service sector in Uganda emerged prematurely as the leading driver of economic growth. This was before the country fully industrialised as described under the dual economic development model. Despite the enormous contribution of the service sector to economic growth in Uganda, an empirical analysis of its drivers is still in shortage. The main objective of this study is to examine the drivers of rapid growth in Uganda’s service sector using an Autoregressive Distributed Lag (ARDL) model and a long annual time series spanning the period 1980-2020. The results of this study showed that the past level of service performance determines how the sector performs at present. Also, the Human Capital Index (HCI), Foreign Direct Investment (FDI) and Gross National Expenditure (GNE) significantly improve service sector growth in both the short run and long run. Also, if the service sector experiences a shock, the sector will adjust to its long-run equilibrium at an adjustment speed of 24.2%. The findings of this study, therefore, highlight the need for government to increase funding for human capital development through investing in the education and healthcare sectors. Further, the government should implement favourable trade policies aimed at attracting more FDI. Foreign investors should be provided free land and tax holidays. Given the important role that the service sector plays in Uganda’s economy, a large share of GNE should be directed to the service sector to stimulate its performance. |
| first_indexed | 2024-03-11T21:25:35Z |
| format | Article |
| id | doaj.art-15b19908ce2347bd871b746ea6efd4a5 |
| institution | Directory Open Access Journal |
| issn | 2810-9430 2810-9449 |
| language | English |
| last_indexed | 2024-03-11T21:25:35Z |
| publishDate | 2023-03-01 |
| publisher | World Scientific Publishing Co. Pte Ltd. |
| record_format | Article |
| series | International Journal of Empirical Economics |
| spelling | doaj.art-15b19908ce2347bd871b746ea6efd4a52023-09-28T04:15:06ZengWorld Scientific Publishing Co. Pte Ltd.International Journal of Empirical Economics2810-94302810-94492023-03-01020110.1142/S2810943023500038Analysis of the Drivers of Service Sector Growth in UgandaMukoki James0Hisali Eria1Mukisa Ibrahim2School of Economics, Makerere University, P.O. Box 7062, Kampala, UgandaSchool of Economics, Makerere University, P.O. Box 7062, Kampala, UgandaSchool of Economics, Makerere University, P.O. Box 7062, Kampala, UgandaThe service sector in Uganda emerged prematurely as the leading driver of economic growth. This was before the country fully industrialised as described under the dual economic development model. Despite the enormous contribution of the service sector to economic growth in Uganda, an empirical analysis of its drivers is still in shortage. The main objective of this study is to examine the drivers of rapid growth in Uganda’s service sector using an Autoregressive Distributed Lag (ARDL) model and a long annual time series spanning the period 1980-2020. The results of this study showed that the past level of service performance determines how the sector performs at present. Also, the Human Capital Index (HCI), Foreign Direct Investment (FDI) and Gross National Expenditure (GNE) significantly improve service sector growth in both the short run and long run. Also, if the service sector experiences a shock, the sector will adjust to its long-run equilibrium at an adjustment speed of 24.2%. The findings of this study, therefore, highlight the need for government to increase funding for human capital development through investing in the education and healthcare sectors. Further, the government should implement favourable trade policies aimed at attracting more FDI. Foreign investors should be provided free land and tax holidays. Given the important role that the service sector plays in Uganda’s economy, a large share of GNE should be directed to the service sector to stimulate its performance.https://www.worldscientific.com/doi/10.1142/S2810943023500038Service sectorcointegrationARDLUganda |
| spellingShingle | Mukoki James Hisali Eria Mukisa Ibrahim Analysis of the Drivers of Service Sector Growth in Uganda International Journal of Empirical Economics Service sector cointegration ARDL Uganda |
| title | Analysis of the Drivers of Service Sector Growth in Uganda |
| title_full | Analysis of the Drivers of Service Sector Growth in Uganda |
| title_fullStr | Analysis of the Drivers of Service Sector Growth in Uganda |
| title_full_unstemmed | Analysis of the Drivers of Service Sector Growth in Uganda |
| title_short | Analysis of the Drivers of Service Sector Growth in Uganda |
| title_sort | analysis of the drivers of service sector growth in uganda |
| topic | Service sector cointegration ARDL Uganda |
| url | https://www.worldscientific.com/doi/10.1142/S2810943023500038 |
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