Effect of Human Capital on Economic Development in Rwanda

Firdaus Mugabekazi
University of Kigali, Rwanda
Email: mfridaus@gmail.com

Abstract: This study analysed the effect of human capital on economic development in Rwanda from 2000 to 2023. It adopted a quantitative, econometric research design. The population comprised Rwanda’s 24 annual national time-series observations for the period; all were used, so no sampling was applied. Secondary data were collected through documentary review of official statistical publications and analysed in E-Views 7 using descriptive statistics, Augmented Dickey-Fuller unit root tests, Johansen cointegration, Granger causality, diagnostic tests, and multiple regression. The model explained 55.6% of the variation in real GDP growth (Prob(F) = 0.0077). School enrolment had a significant positive effect on growth (β = 0.173, p = 0.0103), whereas labour force participation (β = −1.147, p = 0.0225), wage and salaried employment (β = −0.783, p = 0.0239), and current health expenditure (β = −1.456, p = 0.0263) had significant negative effects. The NEET rate, the proxy for skills and training, was not significant (p = 0.1168). The study recommends that the Government of Rwanda sustain investment in education, align vocational training with high-growth sectors, expand social services that support productive labour force participation, evaluate the efficiency of health expenditure, and promote formal, high-value jobs.