Education Expenditure, Human Capital and Economic Growth in Uganda: Time Series Analysis (1962 - 2002)

Human capital has been seen by many as one of the key determinants to economic growth. However empirical studies on the role of human capital especially education to economic growth have been contradictory. In our paper we examine the question whether education expenditure translates in human capital and hence economic growth in the case of Uganda using a time series technique. Using descriptive statistics, cointegration, error correction model and regression analysis we find that there is both a short run and long run impact of education expenditures on economic growth in Uganda through human capital. In our study we examined the average years of schooling as a proxy for human capital and found it to be positive and statistically significant. In our empirical analysis we find that a one percent increase in the average years of schooling, ceteris paribus would lead to 0.38% increase in real GDP in the long run and 0.2% increase in real GDP in the short run.