The Political Settlement and ‘Deals Environment’ in Rwanda: Unpacking Two Decades of Economic Growth

Effective States and Inclusive Development Working Paper No 57

41 Pages Posted: 29 Apr 2016

See all articles by Pritish Behuria

Pritish Behuria

London School of Economics & Political Science (LSE)

Tom Goodfellow

University of Sheffield

Date Written: April 10, 2016

Abstract

This paper explores the political economy of growth in Rwanda during two decades of economic expansion under the Rwandan Patriotic Front (RPF). It builds on recent work emphasising the importance of party-owned enterprises in sustaining this progress, but goes further by analysing state-business dynamics in four key sectors of the economy: coffee, mining, construction and financial services. For each sector, the evolution of the ‘deals environment’ (Pritchett and Werker 2012) is detailed and the differential degrees of growth, liberalisation and foreign competition are explained. This detailed sectoral analysis enables us to develop a deeper understanding of how political concerns have affected Rwanda’s economic growth trajectory. The paper argues that while the Pritchett-Werker framework is a helpful starting point, the ‘deals environment’ in Rwanda has not progressed along a linear trajectory from ‘closed disordered’ to ‘open ordered’ deals as posited in the model. Instead, the maintenance of growth has involved the cultivation of carefully protected pockets of ‘closed’ deals in strategic nodes of different sectors. Moreover, the combination of rapid economic liberalisation with politically motivated ‘closed’ deals has led to a degree of continued (or renewed) disorder in some sectors, which may yet threaten growth in the long term.

Keywords: Rwanda, economic growth, political settlement, deals, coffee, mining, construction, financial services

Suggested Citation

Behuria, Pritish and Goodfellow, Tom, The Political Settlement and ‘Deals Environment’ in Rwanda: Unpacking Two Decades of Economic Growth (April 10, 2016). Effective States and Inclusive Development Working Paper No 57. Available at SSRN: https://ssrn.com/abstract=2771633 or http://dx.doi.org/10.2139/ssrn.2771633

Pritish Behuria

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Tom Goodfellow (Contact Author)

University of Sheffield ( email )

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