Rwanda's Economic Performance and Foreign Direct Investment: A Review of Trends and Policy Implications

This study examines the relationship between Foreign Direct Investment (FDI) and economic growth in Rwanda over the period 1970–2019. FDI has increasingly become an important component of Rwanda’s economic development strategy, particularly in the country’s transition toward a private-sector-led, knowledge-based economy. The study highlights the growing importance of FDI following the adoption of Rwanda’s new industrial policy in 2008, which contributed to increased foreign investment inflows. FDI can support economic growth through technology transfer, employment creation, improved managerial practices, skills development, increased government revenue through taxation, and enhanced competition among domestic firms. It can also generate positive externalities by improving labour productivity, management capacity, and production standards. Drawing on existing literature and trends in Rwanda’s FDI and economic performance, the study assesses how foreign investment has contributed to the country’s economic transformation. The analysis suggests that FDI has played a significant role in supporting Rwanda’s economic growth and development by strengthening productive capacity, promoting technological advancement, and creating employment opportunities. The study concludes that maintaining an attractive investment environment, strengthening institutional frameworks, and encouraging productive foreign investment are essential for sustaining Rwanda’s long-term economic performance