The Effect Of Diaspora Remittances On Economic Growth The Case Of Rwanda

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

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