Impact of Foreign Direct Investment, Population Growth & Inflation on Unemployment in Rwanda (1985-2018)

International Journal of Economics and Management Studies
© 2020 by SSRG - IJEMS Journal
Volume 7 Issue 9
Year of Publication : 2020
Authors : Uwiringiyimana Felicien, Gakuru Elias
How to Cite?

Uwiringiyimana Felicien, Gakuru Elias, "Impact of Foreign Direct Investment, Population Growth & Inflation on Unemployment in Rwanda (1985-2018)," SSRG International Journal of Economics and Management Studies, vol. 7,  no. 9, pp. 100-108, 2020. Crossref,


This paper examines the impact of foreign direct investment, population growth, and inflation on unemployment in Rwanda. Using co-integration analysis of Johansen and Error Correction Model (ECM), annually, periodicdata from 1985 to 2018 were analyzed so as to reach this aim. The results indicated that there is a significant long-run relationship between foreign direct investment net inflows (% of GDP), population growth (annual %), inflation, GDP deflator (annual %), and unemployment (% of the total labour force).In the longrun, as well as in the shortrun, the two independent variables (population growth and inflation) have a positive impact on unemployment, but Foreign Direct Investment has a negative impact on unemployment in the period of study. About inflation and unemployment, there is no presence of the Philips curve. The government of Rwanda has been recommended to reinforce policies of attracting foreign investors, to reinforce control of demographic changes, to reinforce made in Rwanda policy in order to discourage imported inflation and controlling money supply using monetary policy tools, especially selective credit control and wage control.


Johansen co-integration analysis, Error Correction Model, Foreign direct investment, population growth, inflation, unemployment, and Rwanda.


[1] Vasile. An Adriana. D, Andreea. M, FDI and the Unemployment - A Causality Analysis for the Latest E.U. Members,2nd Global conference on business, economics, management and tourism, 30-31 October 2014, Prague, Czech Republic., (2015)
[2] Yaylı, S. and M. K. Değer,The Relationships between Foreign Direct Investments and Employment: Dynamic Panel Data Causality Analysis on Developing Countries, (1991-2008), Finans, PolitikveEkonomikYorumlar, 49 (568) (2012) 43-51.
[3] Craigwell, R, Foreign Direct Investment and Employment in the English and Dutch-speaking Caribbean”. Working Papers, Tripartite Caribbean Employment Forum (2006) Barbados.
[4] Muhammad. S, TahirMahmood. A, M. N. Bhalli, Determinants of empirical unemployment evidence from Pakistan , Pakistan economic and social review.,51(2) (2012) 191-207
[5] Nayyra et al., ,,Foreign direct investment and unemployment reduction in Pakistan, college of economics and business administration, Chongqing University, Chongqing, 400030, p. r. China., (2012).
[6] Akhtar, I. and Ozturk, L., Can unemployment be cured by Economic Growth and Foreign Direct Investment in TURKEY?” International Research Journal of Finance and Economics, 27 (2009) 203-211.
[7] HabibaEdward ., Impact of population growth on unemployment in Nigeria,AmericanUniversity of Nigeria department of economics., (2016).
[8] Chaido and Melina, Inflation, Unemployment and the NAIRU in Greece., International Conference On Applied Economics (ICOAE) ., (2012).
[9] Islam, F., Hassan, K., Mustafa, M. and Rahman, M., The Empirics of U.S. Phillips Curve:A Revisit, American Business Review, 20(1) (2003)107-112.
[10] Maximova Alisa ., The Relationship between Inflation and Unemployment:A Theoretical Discussion about the Philips Curve, Journal of International Business and Economics December, 3(2) (2015) 89-97
[11] Pa Alien Kasseh., The Relation between Inflation and Unemployment in the Gambia: Analysis of the Philips Curve,. Journal of Global Economics. Kasseh, J Glob Econ., (2018) 6:2DOI: 10.4172/2375-4389.1000294
[12] Adekola, P.O., Allen, A.A., Olawole-Isaac, A., Akanbi, M.A. &Adewumi, O., Unemployment in Nigeria; A Challenge of Demographic Change?,,International Journal of Scientific Research in MultidisciplinaryStudies2(5) (2016)1-9. HTTP//
[13] Maijama. R, Musa. K, Yakubu. M, Mohammed. N ., Impact of Population Growth on Unemployment in Nigeria: Dynamic OLS Approach, Journal of Economics and Sustainable Development., (2019)
[14] Ademola, A.S. &Badiru, A., The Impact Unemployment and Inflation on Economic Growth in Nigeria (1981-2014), International Journal of Business and Economic Sciences Applied Research (IJBERSAR), ISSN2408-0101, 9(1) (2016) 47-55.
[15] Gujarati, Damodar N., Essentials of Econometrics,Irwin/McGraw-Hill, 2nd Ed., (2003).
[16] Johansen, Soren.,Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector-Autoregressive Models, Econometrica 59 (6) (2003)1551–80.
[17] World Bank ., Annual Reports: 1985-2018. Washington DC, USA. (2018).