The Effect of Diaspora Remittances on Economic Growth: The Case of Rwanda

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Addis Ababa University


Remittances sent to the sub-Saharan region are amongst the highest recorded, which amounted for more than the total foreign direct investment flow and foreign aid in 2013. They are also believed to increase domestic investment, which in turn increases the macroeconomic stability of a country’s economy. With the general objective of investigating the effect of diaspora remittances on economic growth in Rwanda, this study used a time series data from World Bank Development Indicators which spans from 1990 to 2017 and applied an auto regressive distributed lag (ARDL) approach. The outcome of the study revealed that, the long run growth impact of remittances is positive and significant for the study period. This was also backed with a positive and significant short run multiplier effect, which portrays remittances as a driver for economic growth. Moreover, the Stability test has confirmed that the established positive relationship of remittances and economic growth is stable and can fairly be used for forecast.



Remittances, Economic Growth, ARDL, Rwanda