The Relationship between Foreign Direct Investment (FDI) and GDP Per Capita in Rwanda

Abstract

Foreign direct investments have been identified as an important source of financing for developing countries. In this regard, Rwanda has actively attracted FDI by creating and sustaining a high conducive investment climate through important reforms which make it easier for businesses to get started, get loans, pay taxes, etc. The package for investment promotion includes among others: regulatory framework, registration facilities and requirements, change of registered businesses, closing businesses, disclosure requirements, and other facilities such as working permit, government’s protection of investments, settlement of disputes, transfer of funds, special economic zone facilitations, public private partnership, etc. This paper investigated the relationship between the attracted FDI and the GDP per capita in Rwanda. The findings revealed that there is a strong positive relationship between the FDI inflows and the GDP per capita for the studied period which covers 2008 to 2012, thus a positive effect on the economic growth.

Keywords: FDI, Investment, GDP, Poverty