Abstract:
The empirical study reveals controversies regarding the effect of foreign direct investment on the
growth of the host economies .Some researchers found a positive effect whiles others found a
negative effect.
The main objective of this study was to assess the impact of foreign direct investment on the
economic growth in Rwanda over the period of 1970 to 2014. The study has examined time series
data over a period of fourty four years. Multiple regression technique and Eviews 10 econometric
software were utilized to measure the relationship between independent (FDI) and dependent
variable (GDP growth) .The result showed the positive but not statistical significant influence of the
foreign direct investment on the economic growth in Rwanda.
The findings also reveal the complementarily between FDI and domestic investment toward the
growth .Therefore the study concluded that foreign direct investment has a positive but it is
insignificant effect on the economic growth in Rwanda and is opposed to some findings that foreign
direct investment has a negative effect on the growth of economy. It was recommended that
government should improve the state infrastructure to encourage the meaningful investment from
abroad. It is also recommended that more attention should be paid to formulate policies that will
maximize the benefits from FDI inflows. Otherwise multinationals will potentially get profit than
the country since there is not profit repatriation low
CHAPTER ONE: INTRODUCTION AND BACKRAOUND
1.1 Introduction
Foreign direct investment is the investment involving management control of resident entity in
one country by an enterprise resident in foreign country or the foreign investor hold at least 10
per cent of the stake in the foreign enterprise. This means that the investor can exercise some
considerable measures of influence over the enterprise or that the foreign investor invests
directly (United Nation Conference on Trade and Development,2012).
During the four decades foreign direct investment (FDI) has become increasingly important in
the developing world, with a growing numbers of developing countries succeeding in attracting
substantial and rising amounts of inward FDI .economic theory has id
