The impact of Rwanda's investment climate on attracting foreign direct investment flows
Thesis (M.Phil)--Stellenbosch University, 2015.
ENGLISH ABSTRACT: Foreign direct investment (FDI) has become an increasingly important element for economic development and integration for developing countries, least developed countries and transition economies. Following the 1990’s frenzy of promoting trade liberalisation and enacting foreign investment policy reforms in developing countries, developing countries have enjoyed amplified FDI inflows and economic growth rates. Rwanda was among the countries that embarked on a journey to reform its foreign investment policies and endorse trade liberalisation. The main purpose of this study was to develop an empirical framework to examine the impact of an improved investment climate on attracting FDI by employing a panel-data set of Rwanda for the period 1980 to 2013. The regression model in the study used six explanatory economic variables that were likely to influence Rwanda’s FDI attractiveness, namely GDP (measures the market size), GDP per capita (measures the productivity), inflation (measures the country risk and macroeconomic policy), mobile telephone (measures the technological infrastructure), openness (measures the trade liberalisation), and secondary school enrolment (measures human capital). The study found GDP, GDP per capita and secondary school enrolment to be the main economic variables that lure FDI inflow to Rwanda. The study also found the abovementioned explanatory variables to be statistically significant determinants of FDI inflows into Rwanda.
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