Journal of Economics and Behavioral Studies

Increasing access to business incubation services for cottage start-ups to promote inclusive entrepreneurship in Southwest Uganda

Manasseh Tumuhimbise — 2024-04-07

In the last 30 years, Uganda has grappled with rising unemployment, notably impacting small businesses, with 85% failing within the first five years. This trend is pronounced in the cottage industry, where 46% of businesses couldn't sustain operations in 2017. In Mbarara district, 65% of cottages established in 2015 had closed or relocated by 2019. This study explores the impact of business incubation support services on reducing cottage start-up failures and promoting inclusive entrepreneurship in Mbarara City. Examining 800 start-ups in handicrafts, soap making, pottery, tailoring, and shoe making, the study employed a correlational research design. The data, collected through a Likert scale questionnaire, revealed that access to finance, capacity building, and information technology (ICT) adoption accounted for 13.2% of the variation in cottage enterprise growth potential. Notably, increased finance positively correlated with growth, while capacity building showed no significant association. ICT adoption, however, had a negative correlation. The study emphasizes the need for cottage entrepreneurs to receive more training on product improvement, additional capital, equipment, and partnerships. In conclusion, access to capacity building, funding, and ICT adoption is pivotal for cottage enterprise expansion, advocating for incubation support services to enhance collaboration, funding, equipment, and product improvement training for cottage entrepreneurs.

Consumption with Imperfect Income Expectations

TIANHAO WU — 2024-04-07

Using survey forecast data, this paper documents several stylized facts about forecasters’ beliefs on income and consumption and aggregate consumption growth: (1) survey-based income forecast at consensus level is highly correlated with consumption growth; (2) consensus income and consumption growth forecast errors under-react to macro news shocks and (3) consensus income forecast error and consumption growth under-react initially and overreact subsequently in response to main business cycle shocks. Motivated by this evidence, we propose a model of equilibrium consumption determination where agents learn the exogenous latent permanent income process and extrapolate the past income realizations. Our model can generate the behavior of consumption that the rational-expectation Permanent Income Hypothesis fails to predict excess smoothness and excess sensitivity of aggregate consumption, and negatively correlated consumption growth and past income change in the medium run. This study contributes to the literature on economic belief formation and empirical consumption by showing how survey-motivated evidence can jointly explain a range of important anomalies.

The Impact of Value Chain Financing on Profitability for South Africa's Edible Oil Manufacturing Companies: Raw Materials and Working Capital Approaches

Kansilembo Aliamutu — 2024-04-07

Edible oil manufacturing companies in South Africa generate significant amounts of revenue, which they do not capitalize on. South Africa has no shortage of consumer demand for commodities. The edible oil sector is hampered by poor raw material output in the nation, insufficient financing by value-chain participants, and a shortage of specific effort and understanding in growing the value chain. The research aim was to evaluate the impact of value chain financing on profitability for South Africa's edible oil manufacturing companies via raw materials and working capital approaches. Utilizing secondary data collected from the financial statements of edible oil manufacturing companies from 2012 to 2022. Throughout the research, a positivism paradigm was applied using a descriptive retrospective panel data approach. Multiple regression analysis was used to determine the connection between the value chain financing variables (raw materials as well as working capital) and the profitability of edible oil manufacturing companies in South Africa. On financing in raw material there was a negative correlation among the two variables, but it is not statistically significant (r = -0.030, p =.424). On financing in working capital, there was a positive correlation (r =.201, p =.012), the connection between financing in creditors management and profitability in the edible oil company has a positive correlation (r =.162, p = 0.09) but is not statistically significant. The research found that raw material financing and working capital financing had no statistically significant connection to the profitability of edible oil manufacturing companies in South Africa.

Financial Literacy, Access to Digital Finance and Performance of Ugandan SMEs in Mbarara City

Rennie Bakashaba — 2024-04-07

This study investigates the relationship between financial literacy and access to digital finance, and how these impact the performance of small and medium-sized enterprises (SMEs) in Uganda. From a population of 4,776 SMEs in Mbarara City, the research uses a sample of 351 SMEs with a response rate of 99%, chosen based on the Krejcie and Morgan (1970) tables. To investigate the correlations between the variables, a cross-sectional design is used. The findings indicate a positive and significant relationship between financial literacy, access to digital finance and SME performance in Uganda. The regression analysis indicates that 45.7% of the variation in Ugandan SME performance can be explained by the combination of the effect of financial literacy and access to digital finance (adjusted R square = 0.457). This implies that the remaining 54.3% of the variation in SME performance was not taken into account in this study and is due to other factors. Given the significant amount of variation explained by these two variables, the study suggests that policymakers and stakeholders in Uganda's SME sector prioritize programs aimed at enhancing SMEs' financial literacy and access to digital finance. Additionally, the study recognizes the presence of other factors influencing SME performance, emphasizing the need for further research and attention in future planning.

Factor Input Prices and Unemployment in Uganda

Benjamin Musiita — 2024-04-07

Examining the impact of input costs on unemployment in Uganda, this study employed an ARDL model based on the Efficiency Wage Theory. Analyzing annual data from 1987 to 2019 and controlling for economic size and currency value, the research found that lending interest rates, real exchange rates, and GDP have a short-term negative impact on unemployment, suggesting an initial rise. However, the study highlights a positive long-run relationship between these factors and unemployment, indicating their potential to contribute to lower unemployment over time. Interestingly, no significant short-run or long-run effect of global crude oil prices on Uganda's unemployment was identified. These findings suggest that while central bank policies promoting lower interest rates can encourage short-term investment and potentially lower unemployment, long-term economic growth is also crucial. Furthermore, the lack of impact from oil prices underscores the need for Ugandan policymakers to diversify the economy beyond oil dependence for sustainable unemployment reduction.

Does Investment in Human Capital Offset Oil Dependence? Unveiling the Drivers of Unemployment in Uganda

Asaph Kaburura Katarangi — 2024-04-07

This study explored the impact of human capital development on unemployment in Uganda. Employing a Vector Auto Regression (VAR) model informed by the Neoclassical growth theory, the research analyzed the relationship between education expenditure (a human capital component) and unemployment, while controlling for physical capital (represented by GDP) and inflation. Utilizing annual data from 1986 to 2022, the findings revealed a complex dynamic. In the short run, higher real effective exchange rates (stronger local currency) and GDP growth might lead to a temporary rise in unemployment. However, the long-term picture suggests a positive influence of real exchange rates and GDP on unemployment, implying they contribute to lower unemployment over time. Interestingly, the study found no direct impact of international oil prices on Uganda's unemployment. The research concludes by highlighting the need for effective population management strategies, such as family planning and education, to ensure sustainable population growth that aligns with economic expansion.

The Role of Artificial Intelligence on Market Performance: Evidence from Scientific Review

Endalkachew Desta — 2024-04-07

The study's primary purpose was to review studies on the role of artificial intelligence in market performance. Artificial intelligence significantly impacts market performance by providing data analysis, personalization, demand forecasting, pricing optimization, customer support automation, risk assessment, and enhanced decision-making capabilities. By leveraging artificial intelligence (AI) effectively, Businesses can improve their competitiveness, improve customer satisfaction, increase revenue, and achieve sustainable growth in the market. A thorough assessment of the literature was done, and screening standards were applied, all to improve the study. Based on the inclusion and exclusion criteria for the articles, data extraction was done by Preferred Reporting Items for Systematic Reviews and Meta-Analyses. 45 published articles were analyzed, and significant data was extracted. The review’s findings collectively emphasize the crucial role of AI in enhancing market performance by improving sales, customer satisfaction, demand forecasting, pricing optimization, risk mitigation, and decision-making processes. As AI continues to advance, further research and practical implementations will likely uncover additional benefits and insights into its impact on market performance. To help more scholars understand and advance the numerous theories and models related to the topic, this concept overview provides guidance.

Human Capital Development and Unemployment in Uganda: The Keynesian Theory of Unemployment in Perspective

Fredrick Nsambu Kijjambu — 2024-04-07

This study delves into the dynamic relationship between human capital development and unemployment in Uganda, employing a Vector Error Correction Model (VECM) to analyze time series data on education and health expenditures as a percentage of GDP, Gross Fixed Capital Formation, and Government Consumption Expenditure. The study applied aggregated secondary data on an annual basis trenching from 1986 to 2022 and from the World Bank Development Indicators (WBDI). For data analysis purposes, the STATA software was utilized. The findings reveal a significant negative effect of education expenditure on unemployment rates in the short term, highlighting the critical role of educational investment in mitigating unemployment. Health expenditure is similarly beneficial in the long term, though its short-term effects are less pronounced. The results advocate for prioritizing educational spending in economic policies to foster sustainable employment growth. These insights are crucial for policymakers aiming to leverage human capital development as a means to counter unemployment and promote economic stability.

Stakeholder Involvement and Team Capacity on the Performance of Rural Electrification Projects in Southwestern Uganda

Violah Mpangwire — 2024-04-07

This research delves into the dynamics of stakeholder involvement and team capacity in shaping the success of rural electrification projects in Southwestern Uganda. The study adopted a cross-sectional design using a quantitative approach. Data was collected from a population of 38 rural electrification projects in Southwestern Uganda. A sample of 34 projects was determined using Krejicie and Morgan's Table 1970, and these were selected through simple random sampling. Findings indicate significant positive relationships between stakeholder involvement, team capacity, and project performance. The analysis reveals that 41.9% of the variations in project performance are explained by stakeholder involvement and team capacity, with 58.1% unaccounted for, signaling potential avenues for future research. The study concludes by advocating for strategic interventions that prioritize stakeholder engagement and team capacity in rural electrification projects in Southwestern Uganda. Therefore, it is important to emphasize the critical role of engaging stakeholders and enhancing team capabilities for successful rural electrification projects.

Elements of Stakeholder Involvement and Performance of Rural Electrification Projects

Sarah Ainomugisha — 2024-04-07

The research aimed to explore how different aspects of stakeholder participation correlate with the effectiveness of rural electrification projects in southwestern Uganda. Employing a cross-sectional research design, data was gathered from 32 projects as the primary unit of analysis, with a sample size of 34 projects selected from a total population of 39 rural electrification projects, determined using Krejicie and Morgan's method from 1970. Analysis methods included Pearson correlation and regression. The findings demonstrated a statistically significant positive relationship between communication, compliance, and engagement with the performance of rural electrification projects. Regression analysis further supported these results, showing significant unstandardized coefficients for each respective dimension. Moreover, the regression model indicated that communication, compliance, and engagement, as measures of stakeholder involvement, accounted for 39.5% of the variability in rural electrification project performance in southwestern Uganda. This suggests that other factors not addressed in this study explained the remaining 60.5%. Therefore, the study suggests that comprehensive stakeholder involvement, involving clear communication before and during project implementation, adherence to regulations agreed upon by stakeholders, and active engagement of all parties at each project stage, is crucial for achieving project success.

The Necessity of the Digital Economy for Sustainable Economic Growth in OECD Countries

Boni David Jonathan Yapi — 2024-04-07

This paper’s main intent is to study the relationship between the digital economy and the sustainable economic growth of selected OECD countries from 2016 to 2020. In doing so, we will also endeavor to shed a brighter light on distinct elements of the digital economy and to comprehend their collective inputs on the economic returns of the digital systems. To achieve this, secondary data have been gathered to contribute to the quantitative design research method. We further employed a panel data set and regression techniques such as the unit root test, the cointegration test and the dynamic GMM amongst others. The results of the study revealed that sustainable economic growth is slightly significantly linked to the input of the digital economy in the short and long run. However, it has also been discovered that e-commerce revenues have a significantly positive effect on sustainable economic growth in the short and long run. Lastly, this study recommended the establishment of national and international economic metrics, reflecting more on the presence of digital systems.

The Mediating Role of Access to Digital Finance on the Relationship between Financial Literacy and Performance of Uganda SMEs in Mbarara City

Rennie Bakashaba — 2024-04-07

The study aimed to explore the potential mediating influence of access to digital finance in the relationship between financial literacy and the performance of SMEs in Uganda. To establish this link, the study used a cross-sectional methodology to collect data at a certain point in time. Barron and Kenney's (1986) four phases required each direct influence of the study variables to follow a significant criterion. These requirements were satisfied because there was a significant direct correlation between SMEs' performance and financial literacy (Beta= 0.655; p<.01). Access to digital finance and financial literacy demonstrated a considerable direct impact (Beta= 0.519; p<.01). Moreover, there was a noteworthy direct impact from SMEs' performance to their access to digital finance (Beta=0.491; p<.01). When considering access to digital finance, the direct association between financial literacy and SMEs' performance decreased from Beta=0.655 to Beta=0.548, remaining statistically significant. This indicates that access to digital finance might serve as a moderator in the connection between financial literacy and SME success. further demonstrated by the indirect effect of (0.106/0.655 x 100) percentage. 16.2%, meaning that the direct effect is explained by 83.8% in the model. It is advised that policymakers and stakeholders in Uganda's SME sector should concentrate on developing clear guidelines on how SME owners can access digital finance. This will help in training them to improve the performance of SMEs. To improve SME outcomes, methods should be developed to make it simpler for people to use digital financial services and raise their financial literacy.