Gross domestic savings and economic growth in Uganda

Abstract

This study examined the effect of gross domestic savings on economic growth in Uganda using annual time series data from 1989 to 2023. Guided by the Solow growth theory, the study employed econometric techniques including the Augmented Dickey–Fuller test for stationary, Johansen co-integration test for long-run relationships, and Ordinary Least Squares regression for estimation. Empirical findings revealed that gross domestic savings and foreign direct investment positively and significantly affect economic growth, while inflation and population growth have negative and significant effects. Trade openness was positive but statistically insignificant. The model explained approximately 63.8% of the variation in economic growth, and diagnostic tests confirmed its reliability. The study concludes that economic growth in Uganda depends largely on increased savings mobilization, attraction of sustainable foreign investment, price stability, and effective population management. It recommends that the government prioritize policies aimed at encouraging domestic savings, maintaining macroeconomic stability, and aligning population growth with resource capacity to achieve longterm, sustainable economic development.