Causality between economic growth and unemployment in East African countries

This study focuses on the factors determining economic growth and unemployment in East African countries from 1990 to 2020. Panel data was analysed using descriptive statistics. Breusch and Pagan Lagrangian multiplier test and Pesaran-Shin unit-root tests were employed. In addition, fixed effects and random-effects GLS regression models were utilised. The Granger causality test, which employs the Panel VECM model, evaluated the direction of causality. The Panel VECM model demonstrated that economic growth impacts unemployment in both the short and long term; however, unemployment does not Granger-cause economic growth. The government's policies should prioritise promoting economic development and reducing unemployment, as this will inevitably result in a decrease in unemployment. Efforts to combat unemployment that do not prioritise economic development will be less effective. Unemployment reduction will be more effective because of initiatives to stimulate economic development.