Regional Economic Integration and Economic Development of Rwanda in East African Community

ABSTRACT The study was carried out mainly to analyze the influence that the Regional Economic Integration has on the economic development of Rwanda since joining EAC and then investigating the extent of economic integration in Rwanda, and determining the level of economic development in Rwanda. Although there is integration in EAC, the economic development and well-being of the society in Rwanda have not been reached to a sustainable development. Regional economic integration of EAC is facing Poor perception and assessment of the costs and benefits associated with the process; this may include Public revenue loss due to tariff reduction, lack of assurance of the market integration benefits to individual member countries and unequal distribution of income. Furthermore, poverty, inefficiency and inadequate education are the impediments to Rwanda in EAC. The study utilized a quantitative and qualitative research design in data collection. The primary data was collected using a questionnaire filled in by employees from main concerned institutions :md people doing business, and analyzed using SPSSll.O and excel software. The secondary data was collected from concerned institutions by analyzing their different official reports and books. The findings seemed to not support the hypothesis (Null hypothesis) that guided the study also pushed for the need for greater stakeholder involvement to attain effective policy harmonization md coordination. It was founded that there is a positive significant relationship between ~conomic integration and economic development of Rwanda in EAC meaning that Rwanda is gaining from being a member of EAC. Again, the study revealed that the imports were higher than exports throughout the study period, both to the EAC and the Rest of the World. This ~xplains why there has been an ever increasing trade deficit during that period. The study also revealed that there has been achievement of trade potentials due to EAC integration and more benefits can be achieved thorough full implementation of the Customs Union Protocol. Recommendations based on the findings point out the need to continue the integration process :;moothly. This would involve, among others, negotiating with Partner States for lowering CET regime and reducing the Sensitive Items list as well as negotiating for completely removal of ~TBs across the EAC Community, and at the same time retaining from adding NTBs. 3iven the limited scope of the study, a more extensive study needs to be undertaken by ::::onsultants who would have the time and resources to delve more deeply in the impacts of ~egional economic integration on economic development of Rwanda in EAC. The need for more focused studies on other aspects of the integration has also been pointed out such as "Regional ::conomic integration and international trade in EAC", and "Regional economic integration and :ax system in EAC".

TABLE OF CONTENTS 

Preliminaries Pages 

Declaration A ............................................................................................................. i 

Declaration B ............................................................................................................ ii 

Dedication ................................................................................................................ iii 

Acknowledgements .................................................................................................. iv 

Abstract. .................................................................................................................... v 

Table of contents ...................................................................................................... vi 

List of tables ............................................................................................................. ix 

List of figures ............................................................................................................ x 

List of acronyms ....................................................................................................... xi 

Chapter One

THE PROBLEM AND ITS SCOPE .......................................................................... 1 

1.1. Background of the Study .................................................................................... 1 

I .2. Statement of the Problem .................................................................................... 6 

1.3. Purpose of the Study ........................................................................................... 7 

1.4. Research Objectives ........................................................................................... 7 

1.4.1. General Objective .................................................................................... 7 

I .4.2. Specific Objectives ................................................................................... 7 

1.5. Research questions ............................................................................................. 7 

1.6. Research hypothesis ........................................................................................... 8 

I. 7. Scope of the Study .............................................................................................. 9 

1.7.1. Geographical Scope .................................................................................. 9 

1. 7 .2. Theoretical Scope ..................................................................................... 9 

1. 7.3. Content Scope .......................................................................................... 9 

1. 7 .4. Time Scope .............................................................................................. 9 

1.8. Significance of the Study .................................................................................. 10 

1.9. Operational Definitions of Key Terms .............................................................. 10 

[wo REVIEW OF RELATED LITTERATURE ........................................................... 12 

2.1. Introduction ...................................................................................................... 12 

2.2. Regional Economic Integration ......................................................................... 12 

2.3. Regional economic Integration in EAC ............................................................. 15 

2.4. Rwanda's Integration in EAC ........................................................................... 16 

2.5. EAC and Economic Development Challenges .................................................. 17 

2.6. Theoretical Perspectives ................................................................................... 18 

2.6.1. Origins of Regional Economic Integration Theory .................................. 18 

2.6.2. Theoretical Welfare Effects and Benefits of Economic Integration ........ 20 

2.6.2.1. Static Effects of Economic integration ................................................. 20 

2.6.2.2. Dynamic Effects of Regional Economic Integration ............................. 24 

2.7. Related Studies ................................................................................................. 27 

2.7.1. Economic Integration and Economic Development ........................ 27 

2.7.2. Investment & Industrial Development in EAC ........................................ 29 

2.7.3. Trade liberalization & Development in EAC .......................................... 31 

2.7.4. Human Resources Development, Science and Technology in EAC ......... 34 

2.7.5. EAC Achievements and challenges ............................................. 37 

2.7.6. Conceptual Framework ........................................................................... 38 

Chapter Three

METHODOLOGY .................................................................................................. 40 

3 .1. Research Design ............................................................................................... 40 

3 .2. Research Population ......................................................................................... 40 

3 .2.1. Sample Size ............................................................................................ 40 

3.2.2. Sampling Procedure ............................................................................... 40 

3.3. Research Instruments ........................................................................................ 42 

3.4. Validity and Reliability of the Instrument ......................................................... 43 

3.5. Data Gathering Procedures ............................................................................... 43 

3.6. Data Analysis and interpretation ....................................................................... 44 

3. 7. Ethical Considerations ...................................................................................... 44 

3.8. Limitation of the study ...................................................................................... 45 

Chapter Four:

DATA PRESENTATION, ANALYSIS AND INTERPRETATION ..................... 46 

4.1. Introduction ...................................................................................................... 46 

4.2. The extent of regional economic integration of Rwanda in EAC .................. .46 

4.2.1. Analysis of Rwanda tariff structure before and after joining the EAC ..... 47 

4.2.2. Analysis of Business environment in Rwanda ......................................... 48 

4.2.3. Respondents' agreements on the extent of Regional Economic Integration 

of Rwanda in EAC ................................................................................. 48 

4.3. The level of economic development of Rwanda in EAC ................................... 50 

4.3.1. Analysis of real GDP and GDP Per capita .............................................. 50 

4.3.2. Analysis of Foreign and Domestic investment ........................................ 51 

4.3.3. Analysis of Rwanda External Trade ........................................................ 52 

4.4. Economic integration influence on economic development of Rwanda in EAC 58 

Chapter five

FINDINGS, CONCLUSION AND RECOMMENDATIONS ................................. 62 

5 .1. Introduction ...................................................................................................... 62 

5.2. Summary of the findings ................................................................................... 62 

5.3. Conclusions ...................................................................................................... 67 

5.4. Recommendations ............................................................................................ 67 

5.5. Areas of further Research ................................................................................. 69 

References ............................................................................................................................... 70 

Appendices ................................................................................................... 73 

Appendix I - Transmittal Letter ............................................................................ 73 

Appendix II -Transmittal Letter for Respondents .................................................. 74 

Appendix III -Clearance from Ethics Committee ................................................... 75 

Appendix IV - Informed Consent ........................................................................... 7 6 

Appendix VII - Questionnaires ............................................................................... 77 

Appendix VIII - Calculation of Content Validity Index ........................................... 79 

Appendix IX - Estimated Budget.. ......................................................................... 80 

Appendix X - Time Frame .................................................................................... 81 

Researcher's Curriculum Vitae ............................................................................................. 82