Remittances, Human Capital and Economic Growth in Uganda
DOI:
https://doi.org/10.59472/9pcjry41Keywords:
Remittances, Human Capital, Real GDP per capita, ARDL, UgandaAbstract
This study investigated the effect of remittances and human capital on Uganda's economic growth using quarterly data for the period from 1999 to 2023. Three objectives were particularly investigated: (i) To investigate the effect of personal remittances on Uganda’s economic growth, (ii) To investigate the effect of human capital on Uganda’s economic growth, and (iii) To examine the combined effect of personal remittances and human capital on Uganda’s economic growth. A linear symmetric autoregressive distributed lag (ARDL) model of Pesaran et al. (2001) was adopted in the estimation of the empirical models. Findings from the study have shown that variations in both personal remittances and human capital individually have a positive effect on real GDP per capita in Uganda, both in the short run and in the long run. However, the estimates indicate that a unit change in human capital has a larger marginal effect than a unit change in personal remittances in their influence on Uganda’s economic growth. Personal remittances and human capital have a positive and statistically significant combined effect on real GDP per capita in Uganda, both in the short run and in the long run. A comparative analysis of the individual and the combined effect reveals that the marginal individual effect of remittances and the marginal combined effect of remittances and human capital are not significantly distant from each other, suggesting that variations in personal remittances have independent effects from the variations in human capital on Uganda’s economic growth. Findings suggest that Uganda’s economic growth can be enhanced if deliberate policy is directed toward increasing investment in human capital development. Findings also suggest that Uganda’s economy can reap some tangible benefits from labor externalization under a streamlined labour migration policy.
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