Abstract:
This research paper aims to investigate the effect of trade liberalisation on trade balance of
Rwandan economy from 2000 to 2023. Specifically include assessing the relationship between
trade liberalisation and trade balance, evaluating the effects economic growth and consumption on
balance of trade deficit, and analyzing historical trends in tariff rate and balance of trade. The
significance of this study lies in providing policymakers with insights to formulate effective
economic policies. The study assesses key economic variables, including Tariff Rate on All
Product, External Trade Balance, Gross Domestic Product, and Final Consumption Expenditure.
Utilizing graphical representation and Ordinary Least Squares (OLS) technique, the research
explores trends and provides empirical findings. The results reveal a long-run negative influence
of Tariff Rate on All Product (as variable determine liberalisation) on balance of trade deficit, as
Tariff rate on All product (TRAP) resulted negative coefficient; however, in short-run resulted
positive effect. Furthermore, the Gross Domestic Product negatively affect balance of trade deficit,
Final Consumption Expenditure has positive effect on balance of trade deficit. These findings
contribute valuable contribution to researchers, offering a case study for trade liberalisation and
external sector of Rwanda economy.
Key words Tariff Rate on All Product (TRAP), External Trade Balance (ETB), Gross Domestic
Product (GDP), Final Consumption Expenditure (FCE), and Foreign Direct Investment (FDI).
