International Journal of Social Science & Economic Research
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Title:
FOREIGN CAPITAL INFLOWS AND ECONOMIC GROWTH IN RWANDA

Authors:
Ntirushwamaboko Dominique, Nuwagira Wilberforce

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Ntirushwamaboko Dominique, Nuwagira Wilberforce
National Bank of Rwanda

MLA 8
Dominique, Ntirushwamaboko, and Nuwagira Wilberforce. "FOREIGN CAPITAL INFLOWS AND ECONOMIC GROWTH IN RWANDA." Int. j. of Social Science and Economic Research, vol. 4, no. 1, Jan. 2019, pp. 457-480, ijsser.org/more2019.php?id=37. Accessed Jan. 2019.
APA
Dominique, N., & Wilberforce, N. (2019, January). FOREIGN CAPITAL INFLOWS AND ECONOMIC GROWTH IN RWANDA. Int. j. of Social Science and Economic Research, 4(1), 457-480. Retrieved from ijsser.org/more2019.php?id=37
Chicago
Dominique, Ntirushwamaboko, and Nuwagira Wilberforce. "FOREIGN CAPITAL INFLOWS AND ECONOMIC GROWTH IN RWANDA." Int. j. of Social Science and Economic Research 4, no. 1 (January 2019), 457-480. Accessed January, 2019. ijsser.org/more2019.php?id=37.

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Abstract:
The assessment of the impact of foreign private capital has become a topic of interest to economists and policy makers given that it is essential for developing countries to bridge the savings gap for domestic economic development. Assessing the impact of foreign capital inflows on countries' development is of current interest by many economists in various countries.
In this paper, we empirically investigate the impact of foreign capital flows on economic growth in Rwanda. The empirical analysis builds on quarterly data spanning the period 2009Q1-2017Q4 and employs multivariate Johansen cointegration and parsimonious error correction model to estimate the specified relationship in the model.
The empirical results show that there exists long run relationship foreign direct investment, foreign aid, remittances, external borrowing and economic growth in Rwanda. The normalized coefficients indicate that foreign direct investment; remittances and foreign aid are positive and statistically significant implying that they positively influence economic growth. The parsimonious error correction model reveals that it takes close to eight quarters to adjust the deviations from the equilibrium path.
The policy implication arising out of these findings is that efforts to attract more capital flows especially foreign direct investment and remittances through improving investment climate and creating avenues for diaspora contributions should be strengthened.