Input-Growth Linkages in Uganda’s Industrial Development: Insights from Sectoral Panel Data

Abstract

Purpose : The purpose of this study is to examine the effect of factor inputs, namely gross fixed capital formation, human capital investment, and population growth, on industrial sector growth in Uganda. The analysis places particular focus on the manufacturing, construction, energy, and mining subsectors, which collectively form the backbone of Uganda’s industrial development. Design/methodology/approach : Using sectoral panel data and the panel autoregressive distributed lag (ARDL) model, the study investigates both short-run and long-run relationships between the selected factor inputs and industrial value-added output. The model was applied to capture dynamic adjustments while testing the relevance of the exogenous growth framework in a developing economy context. Findings : The results reveal mixed effects of factor inputs on industrial sector growth. Gross fixed capital formation shows a positive but statistically insignificant impact in the long run, while demonstrating a significant negative short-run effect, suggesting adjustment costs and inefficiencies in capital use. Human capital investment exerts a strong and consistently negative influence in both the short and long run, indicating structural mismatches between education outputs and industrial labour demand. In contrast, population growth emerges as a robust driver of industrial growth, significantly and positively influencing sectoral output in both the short and long run. The error correction term confirms a stable long-run equilibrium relationship among the variables. Practical implications : These findings highlight critical policy and managerial implications. Policymakers should address inefficiencies in capital allocation, reform human capital development to align skills with industrial needs, and harness Uganda’s growing population as a productive resource. Industrial firms should prioritise strategies that improve the utilisation of capital investments and workforce absorption. Originality/value : To the best of the authors’ knowledge, this study is one of the first to apply a panel ARDL approach at a subsectoral level to investigate input-growth linkages in Uganda’s industrial sector. By integrating the exogenous growth framework with sectoral panel data, the research provides new insights into how factor inputs drive or constrain industrial development in a resource-limited economy.