As one can see in the graph above, the shape of the Uganda curve can be accounted by the following. The HIV/Aids epidemic initially caused major depletion in life expectancy. The introduction of antiretroviral drugs that are affordable and accessible for low income families was a major push in lengthening lives. This was predominantly due to government aid and external donors such as the Bill & Melinda Gates Foundation that have been able to both educate and improve health systems in the country. Uganda's literacy rate has also improved in order to meet the global target, yet an adult population of 10 million people cannot read and write ; this is an indication of a lack of priority in national policy. "Most of us learn under trees or churches, with no place to keep learning materials," said Lukia Kakembo, one of the adult learners who started training in 1997.
On the other hand, Singapore's graph can be accounted for by the following; at independence, most of Singapore’s two million people were illiterate and unskilled. Therefore the focus of this “survival” period was on expanding basic education as quickly as possible. Schools were built rapidly. Teachers were recruited on a large scale. The schools that had been established by different ethnic groups were merged into a single Singaporean education system.
A bilingual policy was introduced so that all children would learn both their own language and English. A textbook agency was created to provide textbooks.
The expansion was so rapid that universal primary education was attained in 1965 and universal lower secondary by the early 1970s. By the end of the “survival-driven phase”, Singapore had created a national system of public education.
But this success seemingly falls apart amid a very high number of dropouts and poor-quality schooling for some of those who complete primary school. The UN Educational, Scientific and Cultural Organisation (Unesco) has estimated that 68% of children in Uganda who enrol in primary school are likely to drop out before finishing the prescribed seven years.
An estimated 30% of girls leave school when they start their periods, often because of a lack of sanitary pads. Higher education levels can lead to higher development as this increases human capital. Higher efficiency, higher skill set, and higher productivity in the long term will push economic development.
A private property system gives individuals the exclusive right to use their resources as they see fit. That dominion over what is theirs leads property users to take full account of all the benefits and costs of employing those resources in a particular manner. The process of weighing costs and benefits produces what economists call efficient outcomes. That translates into higher standards of living for people, increasing economic development.
Healthcare is a necessary part of economic development; as people need to be healthy in order to be more productive and efficient, this increase in productivity and efficiency would cause an increase in both economic growth, increase in life expectancy, decreased infant mortality and higher rates of sanitation: all indicators of economic development.
Gumutindo is a Ugandan coffee cooperative which has experienced massive growth over the last few years, largely thanks to Fairtrade. The cooperative has been able to increase their sales from 54 metric tonnes of coffee in 1998 to more than 1,000 metric tonnes today. Irish Aid works with Fairtrade to help farmers to get a fairer price for their crops. The higher prices has also incentivized better quality coffee.addition to their ongoing efforts to improve the quality of their coffee, alongside economic development: it insists that women should be employed at all stages of production.
“Half of our board of management and 60% of field officers are women. We wanted them to be involved in management and marketing, from the farm right up to production and delivery.”
A report by the World Bank, suggests that Uganda should work to eliminate non tariff trade barriers in effort to diminish the cost of trade and business, alongside transport costs, to subsequently increase productivity, connectivity, efficiency and to make the country a better " land-linked partner."
Evaluating Trade Liberalization in Uganda
The liberalization of the trade regime, over the last decade and a half has attracted foreign direct investment, mainly in manufacturing, and contributed to continued economic growth. Over the past 6 years, Uganda's real GDP has grown at around 6% per annum on average, and is expected to continue growing at about 7% per year in the medium term.
The opening up of the economy to foreign capital has generally resulted in increased foreign direct investment as a share of GDP, and a sizeable amount in the services sector. The gains in the labour market from trade expansion and policy reform are also reflected in the poverty dynamics.
Head poverty decreased from 44% in 1997 to 35% in 2000 but rose again slightly to 38% in 2003 before declining to 31% in 2006. The poverty rate is currently estimated at about 24%. There is evidence that the temporal and spatial trends in poverty rates bear some relationship with export performance in general and international prices, as poverty rends coincided with the reduction in the international market price of Uganda's main export commodity-coffee. Thus, liberalization of trade has generally led to more employment of people, leading to higher disposable incomes and an increase in both economic growth and development.
However income increase will be entirely dependent on the Marshall Learner condition, and trade liberalization may lead to increase importation, worsening the trade deficit.
positive impact on uganda?
Aid, specifically humanitarian and government aid has positively impacted Uganda, which is amongst the world’s top aid recipients for several decades. Between 2003 and 2012 the country received more than $16 billion in official development assistance (ODA), ranking them as the 13th largest recipient worldwide. The ratio of aid-to-GDP peaked at 19% in 1992, and has remained around 10% over the last two decades. One one hand, international donors have monumentally helped government funding with 42% of government budget in 2006 from international donors, although this ratio has decreased almost in half over recent years, the government still relies heavily on donations to fund bills. Foreign aid has not been used to balance budgets and has rather increased efforts at raising tax revenues (which are already very low) as aid donors regularly attach certain conditions on fiscal behavior. Through foreign aid- recipiency, recent reports from the UN have concluded that international aid has contributed to a significant overall reduction of poverty — although this has been polarized to certain regions of the country (not east and north).
On the other hand, the foreign aid may have negatively impacted Uganda as it has also initiated a lethargic response from the government coupled alongside a dependency on foreign aid for budgeting. With foreign aid accounting for over 20% of government revenues, there is an expected negative effect on fiscal behavior — for instance, by eroding government incentives to raise capital through better tax collection. If tax collection becomes implemented, citizens are "paying" for a government and can thus demand better policies and fiscal implementation which has subsequently been missed out as of now
Conclusion upon Evaluation
However overall, for Uganda, economic forecasts are largely positive — with an improved current account balance, strong economic growth, and continued poverty reduction — making the case that foreign aid has positively impacted economic development.
Trade specifically with India has played a key role in Ugandan development in the manufacturing, trade and service sectors. Foreign businesses in trade employ thousands of Ugandans increasing household incomes and leading to greater education, healthcare, and money for sanitation; they are also among the largest taxpayers in Uganda, increasing government budgets for developmental sectors.
However, whilst India has emerged as one of the largest investors and trading partners of Uganda, bilateral trade between the two countries amounted to $728 million in 2010–11, but the balance of trade is heavily in India's favour; Ugandan exports to India account for only $16.7 million of the total trade and thus Uganda can be argued to have less benefit from the bilateral trade. Uganda imports almost 30% of its pharmaceuticals from India, and firms run by PIO families and PIO business groups, such as the Madhvani, Mehta, Mukwano and Ruparelia, are among the largest in Uganda, while Indian companies, such as Tata Coffee, Bank of Baroda and Airtel, have a significant presence in Uganda.
Foreign Direct Investment
Dupasquier and Osakwe (2005) note that foreign direct investments in Uganda contribute to employment generation resulting in higher growth, raised skills of manpower through training and learning and long term positive impacts on employment. According to Moss et al. (2004), while FDI comes with its benefits in terms of increased capital and integration into global economic networks, at a microeconomic level Uganda imposes a legal binding on foreign direct investments whereby they cannot outsource employees, and must employ locals; as such FDI's in Uganda employ a 10 to one ratio of foreign employees to local employees as shown in Figure below:
FDI creates 70,000 direct employment opportunities and indirectly employed more than 165,000. A specific example would be the new discovery of oil deposits in Uganda which attracted foreign investors, as Uganda doesn't have the capacity to explore and extract the resource efficiently, this indirectly also benefited the manufacturing sector which had the greatest percentage of opportunities created from FDI. Companies such as Tullow Oil (TLW.L) of Britain, Total (TOTF.PA) of France, and the Chinese CNOOC Ltd have invested and are planning to invest millions of US dollars in refining crude oil and marketing oil products (Uganda Bureau of Statistics, 2011).
Furthermore, the agricultural sector that is the source of livelihood for 80% of Uganda’s population has also thrived as a result of the backward linkages between local producers and the foreign firms that require the semi-processed goods for production of finished goods for consumption locally and abroad. People employed indirectly through FDI are more than those directly employed by FDI, and this spillover effect is significant for economic development since it ensures that all levels of human resource capacity are utilized (Yarbrough & Yarbrough, 2002). It has further helped reduce unemployment rates on the basis of lack of skill set in the local labor market, causing long-term economic development too in the form of an increase in productivity and efficiency. Due to this, foreign investors are incentivized to train more Ugandans to take up supervisory positions in the organizations, and this trend has enhanced knowledge transfer; this trend was further supported by a study conducted to see the number of Ugandans occupying top management positions in foreign subsidiaries in the country, and established that FDI accounted for 47% of the total number of jobs created in 2010- an indication of the significance of FDI in employment creation.
Moreover, companies that are investing in Uganda also have to pay corporation taxes and this accounts for a large portion of government budget, which allows for investment in healthcare, education, and increased productivity and decreased poverty in the long run, resulting in a spike in economic development.
Further, Uganda lacks the capacity for commercial extraction and utilization of critical available natural resources. Equipment and financial resources from foreign companies in the form of FDI have enabled the extraction of mineral deposits, utilization of the vast arable land as well as exploration of hydrocarbon deposits. Technological transfers and spillover of man power from the foreign subsidiaries to local organizations has helped in developing the capacity of the local labor force making people more productive and domestic organizations expanding their production capacity thereby increasing employment opportunities (Yarbrough & Yarbrough, 2002). Moreover, the transferable skills enable Ugandan’s to take up senior positions that would otherwise have been occupied by expatriates.
However, FDI also has a negative side by virtue of the nature of employment opportunities created. A greater number of unskilled people are employed by foreign companies in contrast to the domestic firms; this indicates the thriving foreign business at the expense of the people. Moreover, the presence of child labor has a negative impact on the future of Uganda’s labor force. It is recommendable that the government offers incentives focused on encouraging rural development. FDI is currently concentrated on major towns, especially in manufacturing which employs majority of the workforce. Rural infrastructure needs to be developed to attract foreign investors, which would help in minimizing rural-urban migration, which is hampering provision of basic services in Uganda’s towns. Moreover, creation of employment in the rural areas would spread the spill-over effects all over the economy leading to balanced economic growth, instead of the current imbalance in the Ugandan economy.