Abstract:
This study analyzed the export diversification on the economic growth in Rwanda between
1999 and 2016. Using co-integration and error correction models, the thesis found a long
run relationship between the variables under study. Empirically, the study attempted to
examine the hypothesis that export diversification was linked to economic growth by
considering the fundamental variables used in the estimated model. The empirical results
revealed that Rwanda’s terms of trade were negative and did not have significant
contribution to RGDP. The empirical evidence regarding the relationship between exports
and economic growth was not robust, although the results of the study indicated that
exports had a positive effect on the overall economic growth. Export could be considered
as an engine of growth even if the study revealed that its impact was quantitatively
insignificant in short-term. The findings results also indicated that the REXP led to growth
of RGDP. The positive correlation of RGFCF was confirmed and RTOT has been
identified with unidirectional relationship. The evidence suggested that trade strategies
promote exports expansion of goods and services which are required as driver of
sustainable economic growth in Rwanda.
