This study empirically analyzes whether economic growth contributed to poverty reduction in Rwanda over the period of 1980-2016. The study applied the Autoregressive -Distribution Lag bounds approach to testing for cointegration, as well Toda and Yamamoto (TY) Granger causality was used in testing for the directional causality among the variables in the study. The Autoregressive -Distribution Lag bounds test results confirm the cointegration between Household final consumption expenditure, Arable land growth rate (hectares), Gross capital formation growth rate (% of GDP), Government final consumption expenditure growth rate (% of GDP) and Service value-added growth rate, when the Household final consumption expenditure, Arable land growth rate and Gross capital formation growth rate are used as dependent variable. Additional, the results from Toda and Yamamoto Granger causality confirms a no evidence of causality association linking the poverty reduction to economic growth and vice versa while considering log Household final consumption expenditure and Arable land growth rate as dependent variables. This means that the neutrality hypothesis grips for Rwanda in the period covered by the study. Furthermore, the study finds out a proof of unidirectional causality running from Gross capital formation growth rate to government final consumption expenditure growth rate, as well as unidirectional causality running from Arable land growth rate to Government final consumption expenditure growth rate and Service value-added growth to Government final consumption expenditure growth rate. The study findings suggested that the government should adopt policy's objective which is focusing on poverty reduction and economic growth.Contribution/ Originality: This study contributes in the existing literature on poverty in developing countries by investigating the causal relationship between economic growth and poverty reduction in Rwanda. It is also providing the basis for inspiration to both researcher and policymakers in line with the contribution of economic development towards poverty lessening.
This paper empirically examines the impact of foreign direct investment on economic growth in the East Africa Community throughout 1970-2017. The study used Pedroni test of cointegration for testing long-run relationship and VECM to inspect the long- run and short-run Granger causality between FDI and economic growth. The paper confirmed the integration of order one among the variables at the first difference. The results from Pedroni cointegration and VECM found that FDI is statistically significant and positively associated to economic growth in East Africa Community country members. The gross capital formation also is affirmative and statistically noteworthy connected to economic progress in the region, while inflation and Population growth were found as statistically significant and negatively correlated with economic, and thus, government final consumption expenditure and trade respectively are negatively and positively statistically insignificant. The VECM Granger causality exploration discovered the bi-directional Granger causality between GDP per capita and population growth rate; FDI and population growth rate, and gross capital formation and population growth. As well, unidirectional Granger causality was found among some variables. On the policy perspective, the study recommended the EAC members to strengthen the foreign direct investment policy through inducements to investors, availability of basic infrastructure, and establishment of the better macroeconomic environment.
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