Abstract:
Foreign Direct Investment (FDI) has been recognized as an important source of capital for boosting economic growth in developing nations. However, empirical evidence on the relationship between FDI and Gross Domestic Product (GDP) in Uganda remains limited. This study examined the impact of FDI inflows on GDP in Wakiso district from 2007 to 2021 using time series data. Multiple regression analysis was conducted using SPSS and STATA to determine the nature and strength of the relationship while controlling for other determinants of GDP including inflation, youth unemployment, population growth and remittances. The findings revealed that a 1% rise in FDI increases GDP by 0.25%. Additionally, youth unemployment, inflation and population growth were found to negatively influence GDP. The Pearson correlation coefficient between population size and GDP was calculated to be 0.819, indicating a strong positive correlation between these two variables. This suggested that as population size increased, there tended to be a corresponding rise in GDP, and conversely, as population size decreased, GDP tended to decline. The study concluded that FDI makes a significant contribution to economic growth in Wakiso district. Policy recommendations are provided to attract more sustainable FDI inflows. Specialized industrial parks and economic zones with conducive infrastructure should be strategically established near the district of Wakiso to attract capital inflows oriented towards exports and aimed at capital-intensive sectors.
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