The role of supply and use/input output tables in the perspective analysis of economic development of Rwanda

THE ROLE OF SUPPLY AND USE/INPUT OUTPUT TABLES IN THE PERSPECTIVE ANALYSIS OF ECONOMIC DEVELOPMENT OF RWANDA DEVELOPMENT OF RWANDA

A dissertation submitted for the partial fulfilment of an award of Bachelor's degree in Applied Statistics.

By

HABYARIMANA Jean Baptiste

Supervisor: RURANGA Charles

Head-Department of Economics

National University of Rwanda

Huye, August 2010

Declaration

I, HABYARIMANA Jean Baptiste, hereby declare that, the work presented in this dissertation entitled «THE ROLE OF SUPPLY AND USE /INPUT OUTPUT TABLES IN THE PERSPECTIVE ANALYSIS OF ECONOMIC DEVELOPMENT OF RWANDA» is my original work and has never been presented elsewhere for any academic award.

All consulted references have been systematically presented in references.

Signature: ............................

HABYARIMANA Jean Baptiste

Date: .................................

Dedication

I dedicate this dissertation to:

God

Family

Teachers at all levels

and

Friends

Acknowledgement

The success of this research work cannot be solely attributed to the effort of one person. In fact, there must be combined efforts to make such exercise a success. It is therefore on this ground that other people deserve my sincere thanks and gratitude.

I thank in advance the National University of Rwanda and the Government of Rwanda for having formed me and supported this study.

I extend my sincere gratitude to my director RURANGA Charles for his help and active role he played towards the success of this work.

Thanks to my family, relatives and friends for their help either materially or morally, especially to NTAKIRUTIMANA Eric my colleague.

I would like to address my special thanks to anyone who directly or indirectly contributed to the success of my study.

Finally, my other thanks go to the people whose published work I have used.

Table of Contents

Declaration i

Dedication...........................................................................................ii

Acknowledgement i ii

Table of Contents iv

List of Tables and Graphics vi

List of Abbreviations........................................................................vii

Preface viii

Abstract ix

Chapter I. INTRODUCTION 1

1.1. General introduction 1

1.2. Background to the study 2

1.3. Problem Statement 3

1.4. Research hypothesis/Research questions 3

1.5. Objectives of the study 4

1.6. Scope of the study 4

1.7. Justification of the study 4

Chapter II: LITERATURE REVIEW 5

2.1. National Accounting in Economic Development 5

2.1.1. Definition and nature of SNA information for economic development 6

2.1.2. Supply and Use Tables (SUT) 6

2.1.3. SUT concept, linear model, and GDP derivation 7

2.1.4. The role of SUT in decision making, projection and planning 8

2.1.5. What SUT can do in developing countries? 8

2.2. Economic Development Concept 9

2.2.1. Introduction 9

2.2.2. Measures related to Economic Development 9

2.2.2.1. Traditional measures of economic development. 9

2.2.2.2. Human Development Index 9

2.2.2.3. Poverty Weighted Index. 10

2.2.2.4. Headcount Index 10

2.2.2.5. Human Poverty Index 10

2.2.3. Sustainable development and environment accounting 10

2.2.4. Three objectives of development 10

2.3. From SUT to economic development 11

2.3.1. System of Economic and Social Accounting Matrix and Extension (SESAME) 11

2.3.2. Supply and Use table as a SAM building-block 12

2.3.3. SUT model that would help in promoting economic development progress of Rwanda 12

Chapter III: METHODOLOGICAL APPROACH TO THE STUDY 13

3.1. Methodology 13

3.2. Sources of data 13

3.3. Conceptual framework of the study 14

3.4. Model designing for the purpose of analysis 15

3.3.1. Logistic Regression Analysis 15

3.3.2. SUT linear model Analysis 15

3.3.3. Human Development Index Analysis 16

Chapter IV: DATA PRESANTION, INTERPRETATION, AND ANALYSIS 17

4.1. Description of economic environment of Rwanda 17

4.1.1. Physical characteristics of Rwanda 17

4.1.2. Economic Environment of Rwanda 17

4.1.3. System of National Accounts of Rwanda 20

4.1.4. Rwanda's Economic Emergency 21

4.2. Availability of goods and services due to SUT improvement 23

4.3. Human Development Index Analysis 26

4.4. Environment quality and resource depletion 29

4.5. Estimating the quality of life with input-output table 29

4.5.1. The Linkage Technique 30

4.5.2. The Activity Specification Technique 30

4.5.3. The Dummy Sector Technique 30

4.5.4. Applying The Techniques To Specific Quality Indicators 31

4.5.4.1. Linkage application 31

4.5.4.2. Dummy technique application 32

4.5.5. Quality of life, poverty and economic inequality 33

4.6. GDP and economic well-being 34

4.7. Data interpretation «SUT/I-O Tables and Economic Development of Rwanda» 36

4.7.1. Environment 36

4.7.2. Environmental change and their impacts 36

4.7.3. Population policy as environmental policy 38

4.7.4. Health and Development 38

4.7.5. Tourism 39

4.7.6. Movement to Urban Region 39

4.7.7. Infrastructure for Development 40

Chapter V: SUMMARY, RECOMMENDATIONS, AND CONCLUSION 43

5.1. Summary 43

5.2. Recommendations 44

5.3. Conclusion 45

REFFERENCES 47