Foreign Direct Investment and Human Capital Development in Uganda.
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Date
2025-05-05
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Makerere University Business School
Abstract
This study examined the relationships between Human Capital Development and Foreign Direct Investment in Uganda. Through literature review, Health, per capita and education variables were adopted as major drivers of HCD. The study deployed a log-linear regression examination to find out the relationship between the predictors and the dependent parameters over the period 1979 to 2022. The study found a significant relationship between Foreign Direct Investment inflow and Human Capital Development in Uganda. This is in agreement with studies in other countries have showed significant relationship between economic development and FDI. This therefore means that for the case of Uganda Increasing the level of foreign direct investment could greatly improve the human capital development as it is witnessed by a significant relationship between the two variables. The study also found a significant relationship between Government Education on expenditure and HCD in Uganda. More attention and allocation should be directed towards education as it has a significant effect on the ability of the economy to produce more goods and services. The findings also found a significant relationship between HCD and Government Expenditure on health. This finding is in agreement with the findings by Ogbonnaya (2017), on the relationship between health and Human Capital development who found out that the relationship between the two variables is positive and significant in Nigeria. The study also found a significant impact of per-capita income on Human capital development. These findings are consistent with most researches published; for instance, a study conducted in Pakistan by Afridi in 2016 on the topic economic development and HCD concluded that human capital promotes economic development. The study therefore, recommends there is need to attract more FDI in Uganda with an objective of increasing the tax base in the country in order to increase HCD and as well as increase Government revenues. The study further recommends increase expenditure on Education and health sectors in order to increase the Human capital development levels in the Uganda. The study finally recommends the that Government should priorities interventions aimed at improving the GDP Per-capita.
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This is a master's thesis.
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Omolo, J. (2025). Foreign Direct Investment and Human Capital Development in Uganda. (Unpublished master's dissertation). Makerere University Business School, Kampala, Uganda.