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CHAPTER FIVE:

CONCLUSION AND RECOMMENDATIONS

5.1 Conclusion

The major aim of this study was to empirically establish the impact of foreign aid on Ugandas

economic growth using a single equation error correction model where it was established that

foreign aid in Uganda does not significantly influence the process of economic growth. Howeer

it displayed an une!pected negatie sign. The study was based on the production function where

foreign aid entered into the production function as one of the inputs. "nalytically# the study used

a single equation error correction model where inflation rate was found to be statistically

significant. $pecifically it was reealed that inflation negatiely influences Ugandas economic

growth. %arlier on# the study began by testing for unit root using the two common tests for

stationary "&' and (( unit root tests before generating an error correction model.

5.2 Policy Recommend!ion"

)asing on the findings of the study# * recommend that the goernment of Uganda should find

alternatie sources of funding since foreign aid has no significant contribution on Ugandas

economic growth. This can be achieed through improing on local reenue generation from the

ta!es either through ta! reforms# discoering new ta! bases# increasing ta! rates# suspending ta!

rebates# holidays and e!emptions thus increasing on the locally generated reenues

The goernment of Uganda should also strie hard to maintain economic stability in the country

by controlling the rate of inflation in the country. Controlling inflation rates will in turn attract

increased inestments from both within and outside thus leading to increased employmentopportunities thus accelerating the rat of economic growth.

5.# A$e" %o$ %&!&$e $e"e$c'

This study inestigated the contribution of foreign aid on economic growth in Uganda from +,,-

to +,1+ using a single equation error correction model but it was no all e!haustie. The study

ariables e!amined in this study are not the only determinants of Ugandas economic growth.

esearch about other determinants of Ugandas economic growth such as the structural rigidities#

political atmosphere# openness# financial deelopment# infrastructural deelopment# agriculture#

industriali/ation# 0ariations in world il prices# discoery of oil deposits and many others is ery

important also. esearch can also be carried out on the relationship between economic growth

and goernment reenue# economic growth and goernment e!penditure# economic growth and

goernment deficit among others. ther areas of the study could include e!amining the impact of

economic liberali/ation on Ugandas economic growth and the impact of %ast "frican

Community on Ugandas economic growth.