Innovation and Growth in Ugandan Manufacturing Firms

Abstract

The aim of this study was to establish the effects of innovation on the growth of Ugandan manufacturing firms' using pseudo panel data. Little is known about the relationship between innovation and firm growth in Sub-Saharan African countries. This study adopts Gibrat's Law of Proportionate Effect and a learning model by Jovanovic (with some modifications) to analyse the relationship between innovation and firm growth in Uganda. Descriptive results show that innovative firms, as measured by computer usage and purchase of new machinery, compared to non-innovative firms on average grow faster. However, regression results showed that there is no significant difference between the growth rates of innovative and non-innovative firms.