Economic implications   of Dependence of Uganda’s Economy

Positive implications

1. It promotes economic growth and development. Loans, grants and direct  foreign  investments   are used  to produce  goods  and services  hence  economic  growth  and development.
2. There is acquisition of advanced technology under external resource dependency. This leads to production of better quality goods and improvement   in service delivery.
3. Skilled man power imported from   other  countries  helps   to  fill  the  skilled   man   power  gap existing  in developing  countries.
4. Foreign dependence allows specialization among countries with all its advantages. For example, under comparative    advantages,    the country   can acquire   certain   products   cheaply   from abroad than being producing   them locally at a high cost.

Negative implications

1. It leads to capital out flow due to over dependence on foreign private   investments.    Foreign investors   repatriate   profits   back to their home countries leading to capital   accumulation    in the country.
2. It leads to unemployment due to heavy dependence   on foreign   skilled   manpower   and overdependence   on imported inappropriate   technology.
3. It leads to neglect in the use of local resources and exploitation of local entrepreneurial skills. This is due to over dependence   on foreign  resources   and manpower
4. Direct economic dependence leads to development which is not in line with the social economic requirements of   the   country.    This   is because    economic   .and   political    decisions    are   made externally without involving the participation   of the people.
5. It worsens the balance of payment position. This is due to heavy dependence   on imports which leads to increased import expenditure.
6. 6. It leads to imported inflation due to heavy dependence    on imports   especially   the petroleum products.
7. It leads to dumping. This  is due  to  heavy  dependence    on  cheap  imports   and  this  retards   the  development   of the industrial  sector  in the county.
8. It leads to fluctuations in incomes and foreign exchange earnings due to   over dependence   on primary   agriculture   exports.   This is because   they experience   price   fluctuations    on the world markets and they are affected natural conditions like bad weather.
9. It increases the debt burden on the future generation in case the country heavily   depends   on loans from foreign countries.