This study aims to explore predictors of the foreign
investment from China coming into Rwanda. One of the components of Rwanda’s economy
is the investment it receives from other countries. In order to achieve these objectives,
the study gathers econometric secondary data from 2007 to 2020 quarterly which were
availably provided by National Statistics of China, World Bank, UNCTAD, National
Institute of Statistics of Rwanda, and the National Bank of Rwanda. From literature
and based on the availability of data, market size, trade openness, infrastructure, and human capital were measured as
predictors of Chinese FDI. The data is analyzed using linear regression in
Stata. The finding of the study showed that variables have a positive effect on
FDI from China, and it found that though FDI had an effect on overall economy of
Rwanda, the effect was not statistically significant. The study suggested that Rwanda’s
policy on foreign investment should aim to attract and encourage Chinese investment
to increase the economy of Rwanda. To encourage more FDI, the Rwandan government can offer Chinese investors
greater ownership, locational, and internalization benefits. It also should continue
to strengthen economic policy transparency since it lowers transaction costs and
hence improves incentives for foreign investment.
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