Employment in Manufacturing and Service Firms in Rwanda

Abstract

Employment in manufacturing and service firm is an avenue for economic transformation as not all countries have a competitive edge in manufacturing and services. This paper analyses employment and its determinants in the manufacturing and service sector in Rwanda. As the growing economy in East Africa, it is very important for Rwanda to have good and quality employment in both manufacturing and service sector as it will have a great impact for economic growth and standard welfare. The paper also provides the practitioners with a better understanding of the employment in manufacturing and service sector in Rwanda. Using the World Bank’s Enterprise survey’s database for 2011, we find that the firm size, Number of establishment that form firm, wages and social payments, and Research and development are statistically significance on the employment in manufacturing and service firms at the level of 0.05 per cent confidence interval. These factors can be used in forming public policy with the aim of using the manufacturing and service firms as an engine for speeding up the shift from a low income to a middle income state as the Rwanda economy is heading. The location of the firm, Age square,manager’s experience, female experience, national sales and research and development had a positive but insignificant impact on employment in both manufacturing and service sector. And on the basis of these observations we make a number of policy and recommendations to promote the quality of employment.