Abstract:
Rwanda is one of the nations that make up the East African Community. As a growing nation, achieving quick and steady economic growth is the main goal of policy. Rwanda aims to reach middle-income status by 2035 and high-income status by 2050. The essential planning and policy framework that will guide the efforts of all stakeholders will be used to achieve this.
This study aims to explore the relationship between Rwanda's economic growth and development parameters. The research collects econometric secondary data from World Bank indices that are available from 1970 to 2023. To validate how development elements impact Rwanda's economic expansion. The relationship between was investigated in this work using multivariate time series analysis. The validity of the model in which the independent variables jointly explain the dependent variable is validated by diagnostic tests and the investigation's findings. Using the econometric technique, eviews-10 is used for data analysis. The results of the tests show that there will be a 67% long-term adjustment rate toward equilibrium existence. The model's results show that while natural resources (0.047), net export (0.61), gross capital formation (0.27), and trade openness (1.046) all predicted lower economic growth, foreign direct investment (0.23), gross domestic saving (0.22), and trade openness (1.046) all predicted higher economic growth. The results also show that FDI has a longer-term impact than a short-term one,
which lowers the amount of foreign earnings that are repatriated to the parent business. The results corroborate the idea that Rwanda implements the earnings repatriation policy since FDI can have an impact on culture and society in addition to giving control over vital industries. Additionally, this research showed that the model passed a number of diagnostic tests. There is a stronger long-term correlation between the variables than a short-term one, according to the findings of the unit root test of the variable residuals. To achieve the greatest and long-term benefits, domestic initiatives to improve manufacturing exports need to be reevaluated in accordance with the FDI policy framework.
