Relationship of Foreign Direct Investment and Economics Growth on Rwandan Economic

Abstract

—The Rwandan economy has made a revolution compare to the past years and has attracted international investors through foreign direct investment and its economic policies. However, it is not clear whether these investment inflows have made a significant impact on economic growth. Many empirical studies have researched the impact or effect of foreign direct investment on economic growth in the host country; some researchers found a positive impact while others found a negative impact especially in a developing country as their said home country gains more benefit than host country depends in same domains. The objective of this paper is to analyze the relationship between Foreign direct investment (FDI) and economic growth by presenting the impact FDI has on Rwandan economic growth by employing the data from 1998 to 2018 a period of 20 years using World Bank data. This study presents two hypotheses related to GDP growth per capita and FDI. Multiple regression techniques and Augmented Dickey-Fuller Test were used to measure the relationships between independent (FDI) and dependent variables (real GDP). In addition, stationarity test was used and economic software Eviews 10 to present the result. The result showed that foreign direct investment has a positive but not statistically significant impact on Rwandan economic growth.