Time series analysis of the relationship between active mobile cellular subscriptions and economic growth in Uganda.

Abstract

This study investigates the dynamic relationship between active mobile cellular subscriptions and economic growth in both the short and long-run for Uganda. It uses an Auto Regressive Distributed Lag (ARDL) model to carry out a time-series analysis of the variables for the period from 2001 to 2024, modeling Gross Domestic Product (GDP) as a function of active mobile cellular subscriptions, Gross Fixed Investment and total labor force(Natural Log of variables is used). The model satisfies classical diagnostic assumptions, showing no evidence of serial correlation or heteroskedasticity. The finitesample bounds test confirms the existence of a stable, long-run level relationship at 5% significance. The Error Correction Term reveals a rapid adjustment, with 79.35% of short run economic disequilibrium correcting back to the steady state trend annually. The sample yields statistically insignificant coefficients in the long-run but has a significant, delayed active mobile cellular subscriptions return in the short-run, which is a 1% increase in active mobile cellular subscriptions in the previous year leading to a 0.56% increase in economic growth in the current year. These findings suggest that active mobile cellular subscriptions do not yield instantaneous returns but require a one-year gestation period to generate economic returns.