TEST OF SIGNIFICANCE OF DOMESTIC PRODUCTION PROTECTION POLICY IMPLEMENTATION ON PRIVATE INVESTMENT GROWTH IN RWANDA 2015-2019

Authors: Ingabire Aline & Bumbali Machiaveli

ABSTRACT

The study entitled “Test of significance of domestic production protection policy implementation on Private Investment growth in Rwanda 2015-2019” was conducted for testing if, there is a correlation between domestic production protection policy implementation and Private Investment growth in Rwanda and whether this correlation is statistically significant or not. The study used only secondary quantitative data. The information analyzed is for the range period from 2015 to 2019 (5 years). Data analysis was used linear regression analysis after the performance of MDS (Multidimensional scaling). Tested indicators are Rwanda’s exports, imports, GDP (Gross Domestic Product), and FPC (Foreign Private Capital) inflows in Rwanda. The MDS analysis has shown that information used was not related and this gives an opportunity for the next step of the linear regression test where the findings show that one-unit change of X1 to X3 or exports, GDP, and Imports lead to 0.070; 0.039 and -0.141 change times of Total FPC Inflows; however, this correlation is not statistically significant. In the other case, if all factors remain null or zero, Total FPC inflows will be equal to 383.938 units. Meaning that domestic investments for both foreigners and domestic investors cannot be stopped however their increase or growth needs a correlation with multiple factors. While the test of correlation also was used via analysis of collinearity diagnostic where findings show that the fraction of the highest eigenvalue to the lowest eigenvalue (3.945/.001) is 3,945 as this is greater than 1,000 meaning that there is a correlation between tested variables. Thus, the conclusion stated that there is a correlation between domestic production protection policy implementation on Private Investment growth in Rwanda, but this correlation is not statistically significant. Thus, it suggested that policymakers in charge of growing private investment inside the country should not only rely on domestic production protection policy but take under consideration all possible factors (all these which are not part of this study) because however, this policy is not in place, private investment should exist and grow.

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