Impact of Foreign Direct Investment, Population Growth & Inflation on Unemployment in Rwanda (1985-2018)

International Journal of Economics and Management Studies

© 2020 by SSRG - IJEMS Journal

Volume 7 Issue 9

Year of Publication : 2020

Authors : Uwiringiyimana Felicien, Gakuru Elias

10.14445/23939125/IJEMS-V7I9P113

How to Cite?

Uwiringiyimana Felicien, Gakuru Elias, "Impact of Foreign Direct Investment, Population Growth & Inflation on Unemployment in Rwanda (1985-2018)," SSRG International Journal of Economics and Management Studies, vol. 7,  no. 9, pp. 100-108, 2020. Crossref, https://doi.org/10.14445/23939125/IJEMS-V7I9P113

Abstract:

This paper examines the impact of foreign direct investment, population growth, and inflation on unemployment in Rwanda. Using co-integration analysis of Johansen and Error Correction Model (ECM), annually, periodicdata from 1985 to 2018 were analyzed so as to reach this aim. The results indicated that there is a significant long-run relationship between foreign direct investment net inflows (% of GDP), population growth (annual %), inflation, GDP deflator (annual %), and unemployment (% of the total labour force).In the longrun, as well as in the shortrun, the two independent variables (population growth and inflation) have a positive impact on unemployment, but Foreign Direct Investment has a negative impact on unemployment in the period of study. About inflation and unemployment, there is no presence of the Philips curve. The government of Rwanda has been recommended to reinforce policies of attracting foreign investors, to reinforce control of demographic changes, to reinforce made in Rwanda policy in order to discourage imported inflation and controlling money supply using monetary policy tools, especially selective credit control and wage control.

Keywords:

Johansen co-integration analysis, Error Correction Model, Foreign direct investment, population growth, inflation, unemployment, and Rwanda.

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