Econometric Analysis of Transport Sector on Economic Growth in Rwanda (1999-2018)

Abstract

The purpose of this study was to examine Econometric analysis of transport sector on economic growth in Rwanda for the period of 1999 up to 2018. It’s an empirical study which used econometric techniques such as unit root test, Engle granger test/cointegration test, linear regression model and the error correction model to analyze the contribution of transport sector on economic growth based on Gross Capital formation in terms of transport infrastructures, trade balance as import and export can be affected by transport system, and contribution of transport services to economic growth. This study found that, there was a strong statistically significant relationship between GDP and transport sector as measured by transport services for both short run and long run as it is shown by R-squared of 0.997316 and 0.782009 of the long run regression model and error correction model respectively. ECM showed a quick recovery of 81.3% every year after a shock happen. This study concluded that there is a short run and long run relationship between Transport service and economic growth. This study recommends that policy implication that can be deducted from this study to facilitate transport sector through expansion of road networks and maintenance of existing road networks coupled with revitalization of alternative mode of transportation such as air transport, rail system and waterways will significantly improve the growth of the economy