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

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par Jean Baptiste HABYARIMANA
National University of Rwanda - Bachelors degree in Applied Statistics  2010
  

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Chapter V: CONCLUSION AND RECOMMENDATIONS

5.1. Conclusion

Supply and Use Tables can play important role in the economy of Rwanda as an integrated framework of the National Accounts. With existing policies to improve SNA, Rwanda's System of Accounts tend to be fully Consistent with the world-wide System of National Accounts (SNA 1993) but it suffers from loss of information to implement SAM as stated in Chapter IV because Income Approaches to compute to compile SUT and to compute GDP is not applied in Rwanda. However, Rwanda's System of Accounts is focused more on the circumstances and data needed in Rwanda and Supply and Use System remain unused due to its complexity.

The Input-Output Framework basing on the information from Supply and Use Framework consists of three types of tables: Supply Tables, Use Tables, and Input-Output Tables.

In Chapter IV it was proved that in Rwanda rather than using Supply and Use Tables linear model was adopted in production and consumption models. It only reflects total Domestic Production, Import, Export, Savings, and Consumption behaviours in Rwanda.

Supply and Use Tables serve not only Statistical but also analytical purpose, especially when they are transformed into Symmetric Input-Output Tables. Basing on the analysis done in Chapter IV, Input and Output Framework is not available, and therefore IO-T can not be available, but through the analysis of GDP the example of GFCF shows for each sector the use of Investment which were necessary to produce the primary and secondary output, the analysis shows also how the education system was improved in the period of 1999 to 2009 due to the investment done in this sector, and investment injected in health system justify the reduction of morbidity and mortality in Rwanda during this period as result there has been increase in Life Expectance.

Along this period, it was proved that the use of Linkage Technique in Rwanda can play an important role in development. The linkage can be applied though many policies of the Government of Rwanda through which households can be disaggregated into income group.

Apart from Linkage technique, the importance of Dummy technique in economic development was proved when analysis management of land, Land productivity and land protection. In order to manage land the government of Rwanda has implemented different policies such as Land Consolidation, IMIDUGUDU, and other policies for managing swamps.

Also the role of activity specification technique was emphasized when trying to analyze the socio-economic welfare during the period of 1999 to 2009 whereby the government of Rwanda has implemented different Program such as PRSP (Poverty Reduction Strategic Paper) in 2000 and EDPRS (Economic Development and Poverty Reduction Strategy) in 2005 and this Specification Technique is used to estimate Input-Output Sector expenditures directed toward influencing the quality of Urban and Rural life in Rwanda.

This study proved how the estimation of quality of life lead to the estimation of social welfare in Rwanda through GDP per Capita, Literacy, and Life expectancy. This study shows how Literacy rate has improved due to the important investment injected in education sector and the education for all Policy, and also Life expectancy has been improved from 1999 to 2009 due to the reinforcement of health sector and this is explained by the reduction of Morbidity and Mortality in Rwanda during this period.

From Supply and Use Tables, Symmetric Input-Output Tables to the Estimation of Quality of Life and Social Welfare, Economic Development can be measured. This study proved this, and showed that the best and rich measure of Welfare for Economic Development is the Human Development Index, and the analysis shows how the improvement in HDI was from 1980 to 2009 (0.357 to 0.477). Even though there has been an improvement, Rwanda is still classified into Low Developed Countries (0.50-0.00 HDI) and in Low Income Countries (500$ Per Capita Income), but the forecast states that Rwanda will reach the group of Medium Developed Countries (0.80-0.50 HDI) in the following 30 years.

The results of this study showed that the first hypothesis was not verified, because SUT/I-O's significant role in the perspective analysis of economic development of Rwanda is not recognized. This means that, even though the role of SUT and IO-T in the perspective analysis of economic development was proved, SUT and IO-T are not available.

The second hypothesis was also not verified because as SUT and IO-T are not available, their role in economic analysis and prevision, decision taking, and policy making for a sustained economic development of Rwanda are not applicable.

The reason why I have combined SUT/I-O Analysis with the Economic Development of Rwanda was to highlight the role of SUT/I-O analysis in economic development and to show that they have a key role to play in the perspective analysis of Economic Development of Rwanda if they are compiled. Much analysis of economic development of Rwanda needs to be based on economy wide basis (e.g. development planning) and this suggests the need for macro-economic approach; most macro-models however are so highly aggregated that they must perforce assume a degree of resource mobility which is just not present in Rwanda. The only answer seems to be SUT/input-output analysis, which is macro in terms of its coverage and get «micro» in terms of its approach.

The interface of SUT and economic development is one of the most exciting and most challenging fields of System of National Accounting. It involves relevant aspects such as planning, budgeting, auditing, taxation, finance, programming, capital formation, project appraisal, and yet others which pertain the overall aim of economic development at both micro and macro levels.

This study was designed to highlight the role of SUT and its wider range of responsibilities imposed on accountant in developing countries like Rwanda, and how it demands a high level of intellectual calibre, knowledge and capacity, and determination so that the accountant responds to the needs of economic development process of Rwanda.

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