Impact of Increased Public Education Spending on Growth and Poverty in Uganda: An Integrated Micor-Macro Approach

Over the past decades, Uganda has experienced impressive economic growth rates, far above the average among Sub‐Saharan African countries. Indeed, on average, GDP grew by more than 6% annually since the 1990s, increasing per capita income by 4% yearly over the period. Economic growth has been led mainly by strong private consumption growth rates and great performance of the export sectors. The structure of the economy has changed over time. The contribution of agriculture to GDP has steadily decreased, whereas the share of services increased markedly. However most of the labor force remains engaged in agriculture activities, mainly as family/self‐employed workers. Hence, despite outstanding economic achievements, the economy remains highly dependent on agriculture (predominantly subsistence), which accounts for more than 75% of the labor force, while these sectors only account for 26% of GDP. One of the biggest challenges for Uganda thus appears to be improvement of the basic skill level of its workers in order to empower them to access wage‐earning jobs in more productive activities. Additional challenges, such as mismatches between the needs of industry in terms of skills and skills being developed during post‐ primary education, arise for workers who have achieved more advanced skills. However, the low level of primary education completion remains the most preoccupying issue.T he objective of this paper is to assess the impact of increased public expenditures in education on school participation, skill level of the workforce, occupational choices between self‐employed and wage earners, economic performance, poverty reduction and income distribution. These additional expenditures in education are financed either through increased indirect taxes, or using the funds to be generated by the exploitation of oil resources.