Using time series data from Uganda covering the period from 1991 to 2017, this paper applies autoregressive distributed lag bounds testing approach to examine the long‐ and short‐run relationship between education and the shadow economy. We find evidence of the long‐run relationship. The results indicate that an increase in both primary and secondary school enrolment significantly reduce the size of the shadow economy in the long run, all else equal. The above relationship is robust to alternative specification and estimation methods. We also uncover bidirectional causal relationship between education and the shadow economy. In the short run, increased school enrolment reduces the shadow economy but in an insignificant manner. At the policy level, the existence of a negative relationship between education and the shadow economy suggests that mitigating informality requires reforming education system to address issues of quality. Additionally, addressing informality may require improving the economic and financial environment so that the needs and obstacles faced by individuals and or businesses are handled. Furthermore, reforming the political and institutional environment may go a long way into mitigating the expansion of the shadow economy in Uganda and Africa in general.
This paper uses primary data to examine the portrait and obstacles faced by SMEs in Bukedi sub-region, Uganda. Evidence suggests that most businesses surveyed (57.6%) were one-man ventures where self-employed people solely managed their enterprises. This indicts the perceived role of SMEs to employment growth and poverty reduction. With the exception of seemingly technical fields like drug-shop business, people without formal education and early leavers exhibited formidable entrepreneurial orientation in non-skill-oriented businesses. This included selling essential products (72.3%), food (100%), produce (57.2%) and running restaurants (81.8%). Therefore, the decision to undertake a specific business might have been determined by the level of education of entrepreneurs. The empirical results further indicate that the factors motivating business start-ups were both “push” and “pull” factors. For the former, circumstances forced unemployed individuals (66.8%) to start business to help themselves, whereas in the latter scenario, attractive conditions lured people (33.2%) into starting business. The study recommends that to augment SME performance, government needs to become solution oriented and initiate robust supportive strategies in areas of regulatory framework, electricity, finance, and enhancing purchasing power. This has got massive potential to revitalise the sector for Bukedi’s economic transformation and development.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.