Impact of FDI Inflow in Agriculture at Rural Development on Economic Growth, Rwanda

This study tests the relationship between Rwandan economic growth with FDI in agriculture, employment in agriculture, and population in rural area between 1990 and 2017. The paper used ARDL “bounds” test method to analyze the co-integration with the constant level relationship of variables. Co-integration coefficients they are estimated by ARDLs model where short run coefficients with the ECM model they are estimated after the verification of long runs (co-integration) equilibrium relationship of economic growth within variables. We find that Rwandan economic growth is depends to foreign direct investment at the present time while agriculture has become a growth engine for economic development. Causality goes from population of rural areas for economic growth, while FDI and employment in agriculture has no causal relationship with economic growth. The paper recommends that Rwanda should have the absorptive capabilities of advanced agriculture technology to fully utilize of FDI benefit. Rwandan's government should promote policies in macroeconomic in order to encourage the FDIs, as well as promoting economic growth in agriculture.