Firm capabilities: Rwanda’s trade performance and policies to create export dynamism

After four decades of virtually no increase in per capita income, the rate of growth since 2000 is impressive. Rwanda is one of the best performing economies in the developing world, lagging only major resource exporters. Income per capita nonetheless remains below LDC average. Investment has been on the rise, inflation has remained moderate and exports have increased significantly – including export of services. The overall level of exports however remains low relative to countries of comparable per capita income. Exports remain concentrated in non-complex products in geographically distant markets while nearby markets demand more complex products than Rwanda can produce. FDI has shown little dynamism as shown in the green graph on the left below. Aid flows (in red below) have increased and are associated with appreciation of the real exchange rate to appreciate (blue – down means appreciation) and making exports more difficult.

Outputs