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Demographic Characteristics and Economic Growth: Rwanda’s Experience

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Journal of Social Economics
Vol. 3, No. 4, 2016, 170-184

Demographic Characteristics and Economic Growth: Rwanda’s

Experience (1995-2014)

Vallence Ngabo Maniragaba1, Fabrice Nkurunziza2, Iradukunda Michel3

Abstract
Given the combination of high poverty rates, persistently high population growth rates, and low per capita
economic growth in most African countries, the link between demography and Economic growth has
received renewed attention. In particular, the question is being asked whether the nature of demographic
characteristics coupled with political unrests observed in most African states are the reasons for Africa’s poor
economic performance.The present work entitled “ Demographic Characteristics and Economic Growth:
Rwanda’s Experience,(1995-2014), ” underlined the effect of demographic characteristics on economic
growth in Rwanda from 1995 to 2014 using econometric analysis. Specific objectives of the study were to
determine the relationship between population growth and economic growth, and between demographic
maturity and economic growth as well as to analyze the effect of gender equality, life expectancy and
education on economic growth.Data from 1995 to 2014 for the variables ; GDP as a proxy for economic
growth, demographic characteristics such as population growth rate (PGR), working age group (WAG),
gender equality (GE), life expectancy (LE), labor force with primary education level (LFPE), labor force
with secondary education level (LFSE) and labor force with tertiary education level (LFTE) were used.
Education, gender equality, working age group and life expectancy significantly explained Rwanda’s
economic growth. No significant relationship between PGR and GDP was found. GDP increased as the
gender equality increases while it decreased as labor force level of education increases. Gender equality had
a greater impact when it was lower than when it was medium or when it was high while labor force with
tertiary education level had a greater impact than labor force with secondary and primary level of education.
Key words : Economic growth, Demographic characteristics, Rwanda, Africa.

1. Introduction
In many developing countries, a combination of declining mortality rates, prolonged life expectancy,
youthful age structures and high fertility rates warrant considerable population increases. What is puzzling
about this phenomenon is the fact that where population growth is the highest, income levels are the lowest.
For poor population groups, consumption tends to be heavily influenced by local production. This may lead
to the emergence of “Malthusian Islands”, particularly in most parts of sub-Saharan Africa, where population
growth is outstripping the current productive capacity of the land (FAO 2013).
Rwanda’s current growth rate stands at 2.63% annually; the total population is estimated at 12,100,049
inhabitants with an average of 270,000 people born every year. The total 5,909,956 of the population are
male and 6,190,093 are female; females represent 51% of the total number of the population. The country
has the highest population density in sub-Saharan Africa of 365 per square kilometer (CIA 2014).
The demographic maturity remains an enormous issue for the country. Children occupy an important
share of country’s total population. The situation has created a high dependency ratio amongst the

1
Statistics Applied to Economy Department INES-Ruhengeri
2
Statistics Applied to Economy Department INES-Ruhengeri
3
Statistics Applied to Economy Department INES-Ruhengeri

© 2016 Research Academy of Social Sciences

http://www.rassweb.com 170
 Journal of Social Economics

population. The success of future strategies thus lies in the youth who represent the majority of the country’s
active labor force. The government decided to prepare a new national population policy. The new policy has
four priorities: to reduce the levels of infant, child, and maternal mortality; to promote education, especially
for girls; to promote long-term family planning methods and make access universal; and to focus on the
needs of the youth. The new policy addresses also the gender issues as they are linked to population and
reproductive health outcomes.

Figure 1: From figure one, the population structure shows signs of high dependency ratio as there
is a high number of people below 15 compared to the working population.
Source: http://www.cia.gov/library/publications/the-world-factbook/docs/profileguide.html, April 2015.

Life expectancy at birth reveals that women will live much longer in coming years than their male
counterparts. The evolution has exhibited a positive trend over years.

Figure 2: Evolution of Life expectancy in Rwanda 2012-2020

The life expectancy at birth for women in Rwanda, as shown by Figure 2, will increase by 3.5 years,
from 66.2 in 2012 to 69.7 years in 2020 while for men it will increase by 3.2 years from 62.6 to 65.8 years
for the same period. Estimates show that the total number of person aged 60 years and above, will be
707,058 in 2020 with 410,682 women while in 2012, the number of persons aged 60 years and above was
511,738 and 304,499 were women (NISR 2015).
Gender equality is one of the cross-cutting areas of Rwanda vision 2020. The country is a world leader
in promoting women's empowerment, and recognizes women as vital to the country’s economic
development. The Constitution, adopted in 2003, pro-actively promotes gender equality. It outlaws any form
of gender discrimination, and enshrines the principle of equality within marriage. It also requires women to
hold at least 30% of decision-making posts. Nonetheless, a patriarchal culture, and persistent disparities
continue to characterize gender relations in Rwanda. Disparities persist in post-primary education; in access
to and control of assets, property (including land), and economic resources; in decision-making at household
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 V. N. Maniragaba et al.

and community levels; in family responsibilities and unpaid care work; and in the experience of violence,
harassment, conflict, and insecurity. Sexual and gender-based violence (SGBV) persists at high levels in
Rwanda. While women have made impressive gains in the political realm, especially at the national level,
their progress in terms of economic empowerment has not been as strong, and economic opportunities
remain markedly gender-differentiated. Cultural factors play a significant role in determining men's and
women's roles and responsibilities, capacities, and decision-making authority. (USAID 2011).
The number of students enrolled in pre-primary education increased of 9% from 130,403 students
registered in 2012 to 142,471 students registered in 2013. In primary education, only 0.31% of increase was
has counted in student enrollment. In secondary education, an increase of 6% occur in student enrollment,
from 534,712 student enrolled in 2012 to 566,370 student in 2013. In higher learning education, the number
of students increased from 76,629 in 2012 to 84,448 in 2013 (NISR 2014).

Figure 3: Enrollment in Primary, Secondary and Tertiary Education

Source: DTU, 2014, Page 15.

Figure 3 shows that there are more girls in primary and secondary schools than boys. Positive
implementation of policies and strategies such as girls’ education particularly in science fields at secondary
and tertiary levels of education. The high enrolment rates stands in sharp contrast to the deficiency of
education in the general population, were over half having no schooling.

Figure 4: Highest Level Attained and Years of Schooling in the Population

Source: DTU, 2014, Page 15.

Rwandans have very little education, with little more than 3 years of schooling per capita, and more
than half the population have no schooling at all. Likewise the educational GINI is high, showing that the
years of schooling are unequally distributed among the population. There are notable differences in male to
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 Journal of Social Economics

female schooling as well, with women being underrepresented in all types of education, having less total
schooling and a more unequal distribution of the education among women - except secondary education were
women have a little more education than men.
Labor force participation rates are usually highest. More people are employed out of necessity than by
choice, as only a fraction of the working-age population can afford not to work. Low unemployment figures
in conjunction with high labor participation rates result in large swathes engaged in vulnerable employment
and many in working poverty. This holds for many economies in sub-Saharan Africa, where female
participation rates feature among the highest in the world.
Rapid population growth and population issues at large have been a recurrent concern of Rwandan
authorities (World Bank 2009).
Since the livelihoods of about 90% of people are inextricably linked to land, population growth and
other demographic characteristics of the country are underlying drivers for increased macroeconomic
constraints especially for economic growth.
In Rwanda, according to the population age pyramid, the young age population and old age population
constitute a bigger percentage than the working age population. This creates a high dependency ratio
amongst youth (CIA 2014); the research has to find out if the age structure of Rwanda negatively affects
economic growth as stated by (Alexia et al. 2006)
The number of authors pointed out that a low pace of population growth helps to enhance economic
growth at a high rate. In 1994 as Rwanda underwent a loss in human lives due to Genocide, the population
growth rate was -5.73% and reached 10.26% in 1998 because of a massive migratory movements that came
back to settle in the country, the current growth rate is 2.63%. These changes, according to Bloom, Canning
and Sevilla (2002), Malthus (1798) and to Kelley (1988), should have positive impact on country’s economic
growth. The current study aims at investigating the realities on ground for the Rwandan case. More
specifically for Rwanda, the current research seeks answers to the following;
 To determine the relationship between population growth and economic growth.
 To estimate the relationship between demographic maturity and economic growth.
 To assess the impact of gender equality on economic growth.
 To analyze the effect of life expectancy on economic growth.
 To establish the impact of education on economic growth.

2. Related Literature Review

This section reviews related empirical literature for related studies. The review was organized in
different sub-sections according to the major components of demographic characteristics.
 Population Growth and Economic Growth
A high population growth is a growing concern throughout the world and a challenge to countries’
economies as said by Gedeon K. T., Gachanja P. and Obere A. 2009.
Richard P. Cincota and Engelman R. (1997) revealed that the relationship between population growth
and depressed economic performance is strongest among the poorest nations of the developing world. The
growth of gross domestic product can be constrained by high dependency ratios, which result when rapid
population growth produces large proportions of children and youth relative to the labor force. Because
governments and families spend far more on children than the children can quickly repay in economic
production, especially as modern schooling and health care replaces child labor, economists expect
consumption related to children to retard household savings, increase government expenditure and ultimately
cut into the growth of GDP.
Malthus (1798) revealed that the world’s population tends to increase at a faster rate than its food
supply. Whereas population grows at a geometric rate (2, 4, 8, 16…), the production capacity grows only
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 V. N. Maniragaba et al.

arithmetically (1, 2, 3, 4, 5…). Therefore in the absence of consistent checks on population growth, Malthus
made the prediction that in short period of time; scarce resources will have to be shared among an increasing
number of individuals. However, such checks that ease the pressure of population explosion do exist, and
Malthus distinguished between two categories, the preventive check and the positive one. The preventive
check consists of voluntary limitations of population growth. Individuals before getting married and building
a family, make rational decisions based on the income they expect to earn and the quality of life they
anticipate to maintain in the future for themselves and their families. The positive check of the population is
direct consequence of the lack of a preventive check.
Bloom, Canning and Sevilla (2002) investigated that three alternative positions define the influence of
population change on economic growth: the population growth restricts, promotes, or is independent of
economic growth. Proponents of each explanation can find evidence to support their cases.
According to Kelley (1988), a low pace of population growth will help to enhance economic growth at a
higher rate. The study concluded that the economic growth should be higher in the situation of slower
population growth even though the impact of population growth in many countries was insignificant.
Population and per capita income are closely associated to depict the picture of economic growth. Lower the
population growth and higher the per capita income. It shows that the nation achieves their growth targets.
Countries with the population growth under 1%, their per capita income could increase at the rate of 2.5%
annually. Countries with more than 2% population growth rate have a little increase in per capita income of
less than 2%.
Mankiw et.al (1992) used a Cobb-Douglas economy-wide production function to investigate the impact
of population growth on ‘steady state’ income per capita as well as economic growth in the transition to the
steady state. They revealed out that an increase in the population growth rate of 10% (e.g. 3% to 3.3%)
would reduce the per capita income in the steady state by 5%. If, however, one considered human capital to
be an additional factor of production (which is eminently reasonable), then the negative impact of population
growth is larger as the population growth now forces economies to use their scarce savings to equip young
people with physical and human capital. As a result, a 1% increase in population growth would decrease the
per capita income by 2%.
 Demographic Maturity/Age Structure and Economic Growth
Bloom, Canning and Sevilla (2002) found out that People's economic behavior and needs vary at
different stages of life. Changes in a country's age structure can have significant effects on its economic
performance. Nations with a high proportion of children are likely to devote a high proportion of resources to
their care, which tends to depress the pace of economic growth.
Gomez and Hernandez (2003) found out that a country that undergoes a fall in its birth rate experiences
an initial decline in the ratio of dependents to working age persons. This, in turn, has a positive effect on
economic growth through declines in the dependency ratio (i.e., fewer mouths to feed) and consequent
increases in the relative size of the workforce.
Bloom and Williamson (1997) also found that demographic factors are important determinants of
economic growth. Their results show that it is not the overall population growth rate that drives economic
performance but age structure. The age structure effect operates through the difference in growth rates of the
working age and the dependent population. The study found that population dynamics explain as much as 1.4
to 1.9 percentage points of the GDP per capita in East Asia. In Southeast Asia, the estimated effect ranges
from 0.9 to 1.8 points of economic growth or about half (1.8/3.8) of the recorded growth in GDP per capita.
 Gender and Economic Growth
A number of authors have pointed out that there may be circumstances under which gender inequalities
of certain kinds can contribute positively to the pace of growth. They suggest that less developed countries
characterized by manufacture of high labor-intensive and price elastic goods for export might benefit from
gender discrimination in wages if cheap, but productive, female labor can boost their price competitiveness
by lowering unit labor costs and attracting investment.
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 Journal of Social Economics

Kabeer and Natali, (2013) stated that when gender discrimination is manifested in ways that do not
compromise the overall quality of the labor force but merely lower the cost of labor for employers,
systematically discriminating against women can have positive effects on growth. Female and male
secondary attainment were included as separate independent variables. The coefficient on female education
was found to be negatively related to growth whereas the one on male education was found to be positive.
The authors suggested that this ‘puzzling finding’ was a ‘measurement’ or ‘omitted variable’ problem. Large
gender gaps in education were interpreted as capturing aspects of ‘backwardness’ not captured by initial per
capita GDP and hence likely to be associated with lower economic growth.
Morrison, Dhushyanth and Nistha (2007) summarizes the evidence from studies examining the
relationship between gender equality and poverty reduction and growth at the macro level. Although micro
level effects of gender equality on individual productivity and human development outcomes have been well
documented and have important ramifications for aggregate economic performance, establishing an empirical
relationship between gender equality and poverty reduction and growth at the macro level has proven to be
more challenging.
Asa Lofstrom (2009) found out that it is impossible to estimate the exact economic consequences of
gender inequalities. But it is possible to do a simple calculation showing the approximate size of the
economic gains that could be made if women (i) worked in the market to the same extent as men, and (ii)
worked in equally productive occupations. To this end, we assume that gender equality in the labor market
means women and men having the same employment rate (plus the same amount of part-time work, the same
occupational breakdown including the same share of entrepreneurs/self-employed), and thus the same level
of productivity. We then calculate what this would mean in terms of increased GDP. The calculation is based
on a number of simplified assumptions. We assume, for instance, that the average pay differentials reflect
differences in productivity, i.e. if men are paid 15 percent more than women, for instance, this corresponds to
a 15 per cent difference in productivity. Applying this assumption, the pay differential is interpreted as a
measure of the productivity gains that can be made when women and men enjoy the same occupational
structure. Once total gender equality is achieved in the labor market, women’s productivity rises to the
current level of men’s. Naturally, this is a simplified explanation of what happens when a labor market
achieves full gender equality. An increased female labor supply, for instance, would probably push up
demand for the welfare services that were previously provided unpaid in the home. Since these tend to be
characterized by low productivity, average productivity in the economy falls when they are marketed. Also,
if these services are publicly subsidized, tax wedges develop that may have an adverse effect on growth.
 Life Expectancy and Economic Growth
Tamara Fioroni (2008) believed that the eff ect of longevity on economic growth has been analyzed in
two strands of literature. The first strand assumes exogenous longevity and shows that increases in life
expectancy improve economic growth in poor countries while have a null or negative eff ect in rich countries.
The second strand identifies human capital as the principal factor aff ecting longevity. These contributions
show that poor countries can be trapped in an equilibrium where life expectancy is low, education is low and
fertility is high whereas rich countries grow in the long-run. When longevity is exogenous, it exerts opposite
eff ects on economic growth. On one hand, an increase in longevity leads to higher savings because the
increased consumption needs in later life. On the other hand, a high longevity reduces accidental bequests.
This implies lower resources for the next generation. The net outcome depends on the initial level of
mortality. When initial life expectancy is low, the positive eff ects dominate and hence rising longevity
stimulates growth. When initial life expectancy is high, however, the negative eff ects tend to dominate and
thus rising longevity tends to hinder growth.
Belgi Turan (2009) suggested that in sub-Saharan Africa, increases in life expectancy will have a
positive impact on growth through fertility and education but the effect will be small while Cervelatti and
Sunde (2009) and Tamura (2006) found out that increased life expectancy could lead to a quantity-quality
trade-off where parents have fewer children but invest more in the education of their children and their own

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education. This suggests that behavioral responses in fertility and human capital investment can offset the
decline in capital-labor ratios and productivity.
Eyyup Eceveit (2013) found out that (i) life expectancy has a positive and statistically significant effect
on real per capita GDP in the long run, (ii) there is a Granger causality running from life expectancy to real
per capita GDP. They argued that health may lead to income growth through its effect on human capital
accumulation provided that people have sufficient food and satisfactory educational opportunities. They
concluded that life expectancy is a fundamental determinant of economic growth in the OECD countries.
 Education and Economic Growth
Stevens and Weale (2003) believed that at a more specific level, a wide range of econometric studies
indicates that the incomes individuals can command depend on their level of education. If people with
education earn more than those without, shouldn’t the same be true of countries? If not the rate of change of
output per hour worked, at least the level of output per hour worked in a country ought to depend on the
educational attainment of the population.
Barro (2013) approach, however, is to think of changes in capital inputs, including human capital, as
jointly determined with economic growth. Figure 3 shows the relationship between male schooling and the
growth rate.

Figure 5: Growth rate versus schooling

The estimated coefficient implies that an additional year of schooling (roughly a one-standard-deviation
change) raises the growth rate on impact by 0.44% per year. As already mentioned, a possible interpretation
of this eff ect is that a workforce educated at the secondary and higher levels facilitates the absorption of
technologies from more advanced foreign countries.
Examining cross-country correlations, Krueger and Lindahl (2001) concluded that the overall education
is statistically significantly and positively associated with subsequent growth only for the countries with the
lowest education.
However according to Aghion, Boustan , Hoxby and Vandenbussche (2009), clearly, the education-
growth relationship is not so simple that one can compute average years of education in a state and
confidently predict growth.
According to Anette Anderson (2010), the main findings are that increased female and male completion
rates in primary school do affect economic growth positively as expected. However, what was not expected
was that an increased participation rate of female and male in the labor force affect economic growth
negatively. The conclusion is that increased levels of primary education among males and females will
increase economic growth.

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3. Materials and Methods

Demographic characteristics considered in the current study included; Population growth (𝑋1 ),
Demographic maturity (𝑋2 ), Gender (𝑋3 ), Life expectancy(X4), Education level (𝑋5 ) as regressors, and GDP
was used as a measure of economic growth. An econometric approach and more specifically time series
analysis was used to model the effects of the covariates on the regressand. Secondary data used for the
current study was got from the World Bank database and government databases such as NISR collected for
any other purpose and records of government institutions in the field of economics of Rwanda for the study.
GDP data were in constant 2005 U.S. dollars. Converted from domestic currencies using 2000 official
exchange rates, Annual population growth rate for year t was the exponential rate of growth of midyear
population from year t-1 to t, expressed as a percentage. Working age group was used as a proxy for
Demographic maturity whereby the total population between the ages 15 to 64 was the number of people
who could potentially be economically active. Gender equality assessed the extent to which the country has
installed institutions and programs to enforce laws and policies that promote equal access for men and
women in education, health, the economy, and protection under law. Gender equality was a qualitative
variable measured in three categories from 1 to 6; where [1-2.5[, indicates low, [2.5-4.5[, indicates medium
and [4.5-6] indicates high. Dummy variables thus DL, DM and DH were created in that order where 1
indicated presence of a category, 0 otherwise.
Life expectancy at birth indicates the number of years a newborn infant would live if prevailing patterns
of mortality at the time of its birth were to stay the same throughout its life. Labor force was differentiated
into three categories, labor force with primary education, labor force with secondary education and labor
force with tertiary education. As education level increases, it is believed that the contribution of labor force
to economic growth increases.

 Model Building
To determine the extent to which demographic characteristics affected Rwandan economy an
econometric time series (a sequential set of data points measured typically over successive times) model
approach was adopted. Distributed lag models were used to estimate the long run relationship between
demographic factors and economic growth. GDP was estimated by the second difference of working age
group, by gender equality (in the presence of dummy variable DL, DM and DH), by labor force with primary
education level, by the second difference of labor force with secondary education level and by the first
difference of labor force with tertiary education level.
To estimate the effect of demographic characteristics on economic growth, was estimated as in equation
(i)
𝑮𝑫𝑷 = 𝑪 + 𝜷𝟏 𝑷𝑮 + 𝜷𝟐 𝑫𝑴𝑨 + 𝜷𝟑 𝑮 + 𝜷𝟒 𝑳𝑬 + 𝜷𝟓 𝑬 + 𝜺; ............................... (i)

With modifications that caters for all the categorical variables in the parent variables, we get to the
model in (ii) below
𝑮𝑫𝑷 = 𝑪 + 𝜷𝟏 𝑷𝑮𝑹 + 𝜷𝟐 𝑾𝑨𝑮 + 𝑫𝑳 𝑮𝑬 + 𝑫𝑴 𝑮𝑬 + 𝜷𝟒 𝑳𝑬 + 𝜷𝟓𝟏 𝑳𝑭𝑷𝑬 + 𝜷𝟓𝟐 𝑳𝑭𝑺𝑬 + 𝜷𝟓𝟑 𝑳𝑭𝑻𝑬 + 𝜺;

Preliminary tests were conducted for normality, stationarity, multicollinearity and causality in order to
identify the nature of the variables before put them in various models for practical analysis. Normality test
relied on the JB-statistics, Multicollinearity test relied on Variance inflation factor (VIF), the larger the value
of VIF, the more troublesome or collinear the variable is, VIF of 5or 10 and above indicates a
multicollinearity. Residual tests or diagnostic test were conducted to justify the model. The tests included,
test for autocorrelation (DW-test), heteroscedasticity (Breusch-Pagan test), significance test for individual
variables (t-test), combined significance of regressors (R2), an over-all significance of the model (F-test)
statistic.

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 V. N. Maniragaba et al.

4. Results and Discussion

In this study, the analysis is done based on econometric model and the relationship between
demographic characteristics and economic growth is assessed. This study presents GDP, population growth
rate, working age group, gender equality, life expectancy, and labor force education level data analysis.

Evolution of Regressors
80.00

60.00
Frequency

40.00

20.00

0.00
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Population growth rate (% of total) Years Working age population (% of total population)
dl dm
dh Life expectancy at birth
Labour force with primary education Labor force with secondary education (% of total)
Labor force with tertiary education (% of total)

Observation from the above figure clearly shows that most variables such as GDP and life expectancy at
birth had a visible positive trend, while others were almost stationary save for population growth rate and
labor force with primary education with its counterparts labor force with secondary and tertiary education
increasing over the past 20 years.
 Preliminary tests
o Normality test
A variable is said to be normally distributed when its Jarque-Bera probability is not significant. In this
case the null hypothesis which states: “The series is normally distributed” is accepted. Appendix Table 1
summarizes normality test results.

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 Journal of Social Economics

J-Bera test can be judged either by looking at the J-B statistic or the probability of the J-B statistics. In
this study the judgment of whether the variable is normally distributed or not was based on the probability of
J-B statistics. From table 1, all variables were found to be normally distributed since the probability of J-B
statistics were all above 10% which is the assumed level of significance. Normal distribution indicates no or
few cases of outliers in the dataset. Since time series data may exhibit trends that may affect estimations,
there is a need to test for stationary of the series or presence of a unit root. ADF test statistic was used I this
research and appendix table 2 summaries the results. The null hypothesis is stated against alternative (The
presence of a unit root against its absence). Where the absolute value of the Augmented Dickey Fuller test
(ADF) is greater than the critical value at 5 per cent significance level in absolute value, then the null
hypothesis is rejected and the alternative accepted; meaning that a variable is stationary.
From Appendix Table 2, only PGR and LFPE are stationary in levels; other variables are stationary
after differencing at 5 per cent significance level. LFTE is stationary after the first difference while WAG,
GDP, LE and LFSE are stationary after the second difference. LE is stationary after the second difference at
10 per cent significance level. It was also important to eliminate some variables which had high correlation
among them. The correlation matrix assesses the degree of pair-wise relationships between variables.
Appendix Tables 3(a) and (b) summarize the results. Strong multicollinearity is detected between LE and
LFSE, LFTE; between LFPE and LFSE, LFTE and between LFTE and LFSE. However, according to the
importance of collinear variables, the researcher chooses to ‘do nothing’ and decides to continue with
variables. (PGR, LFPE) and (DWAG_2, DLE_2) are strongly correlated that they can’t be used in the same
model; therefore PGR is dropped out of the model to deal with the problem of multicollinearity. The model
equation finally is estimated as in equation below

𝑫𝑮𝑫𝑷𝟐 = 𝑪 + 𝜷𝟐 𝑫𝑾𝑨𝑮𝟐 + 𝑫𝑳𝑮𝑬 + 𝑫𝑴𝑮𝑬 + 𝜷𝟒 𝑫𝑳𝑬𝟐 + 𝜷𝟓𝟏 𝑳𝑭𝑷𝑬 + 𝜷𝟓𝟐 𝑳𝑭𝑺𝑬_𝟐 + 𝜷𝟓𝟑 𝑫𝑳𝑭𝑻𝑬
And by fitting the model to the data, we are able to estimate the following model.

DGDP_2=499739299-59005932*DWAG_2+207026184*DL+115130475*DM-124318777*DLE_2-
86137118*DLFSE_2 - 246708023*DLFTE - 12323415*LFPE-1590356Pg_1-
o Estimation Results
By regressing GDP on population growth only the results indicate a negative and statistical insignificant
relationship at 5 per cent significance level. The coefficient of determination marked a poor influence of
PGR on GDP (0.4%). The low adjusted R2, AIC and Schwarz criterion were high indicating the poor fit of
the model without forgetting negative autocorrelation found in residuals. Certainly, population growth rate is
not the best explanatory variable for GDP.
By regressing GDP on the rest of the covariates, the results in the following model show that GDP is
explained by gender equality and labor force education level, working age group and life expectancy become
significant at 10 per cent significance level. Details of the result can be seen from Appendix Table 4

DGDP_2=499739299-59005932*DWAG_2+207026184*DL+115130475*DM-124318777*DLE_2 -
86137118*DLFSE_2 - 246708023*DLFTE - 12323415*LFPE
The findings are in accordance with the literature. Kabeer and Natali (2013) suggest that if gender
inequalities are kept to the level that don’t compromise the overall quality of labor force and lower the cost
of labor for employers, inequalities can have positive impact on economic growth. Economic gender equality
should not be confused with political gender equality. high gender equality has a small effect on economic
growth because Asa Lofstrom (2009) stated, (i) women work professionally less than men, both because their
activity rate is lower and the proportion of who work part time is higher, (ii) women are paid less than men
partly because much of their professional activity is found in typically low paid occupations, and lastly (iii)
women are self-employed to the lesser extent than men.
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Labor force level of education has a negative effect on economic growth where 1% increases of LFPE
decrease 12.32 million RWF of GDP, 1% increase of LFSE decreases 86 million RWF of GDP and lastly,
1% increase of LFTE decreases GDP by 246.7 million RWF. More important to note, perhaps, is that the
more labor force educated, the stronger and negative impact on GDP.
Findings differ from the literature where Barro (2013) and Mincer (1974) believed that an additional
year of school attainment increases economic growth; Steven &Weale (2003) found out that the level of
output per hour worked in a country depends on the educational attainment of the population and then
Krueger and Lindahl (2001) stated that the overall education is statistically significantly and positively
associated with subsequent growth only for the countries with the lowest education. As the labor force
education level increases, one might expect GDP to increase but on the estimation output, this is not
observable in data currently available. for a developing country like Rwanda, this should be explained by the
fact that the more people are educated, the more jobs tends to lack and on one hand, people are employed out
of necessity than by choice (vulnerable employments), on the other hand, unemployment rates increase and
labor costs on labor markets reduce and all this ends up by decreasing the total output.
As for life expectancy and working age group, they both also have a negative effect on economic
growth. At 5 per cent significance level, life expectancy and working age group don’t significantly explain
GDP but at 90% the relationship is statistically significant. Tamara Fioroni (2008), Belgi Turani (2009) and
Amparo Castello and Domenech agreed that the increase of life expectancy increases economic growth,
however according to Cerveratti and Sunde (2009), Tamura (2009) found out that the increase of life
expectancy declines productivity, thus economic growth. Findings show that for a one year increase of life
expectancy at birth, GDP decreases of 124.31 million RWF; this because the increase of life expectancy
increases adult dependency ratio being added to the one of youth which is considerably high, it ends up by
decreasing economic growth instead of increasing it.
The working age group also influences economic growth as opposed to findings where Bloom, Canning
and Sevilla (2002), Gomez and Hernandez (2003) and Bloom and Williamson (1997) found out that the
working age group positively influences economic growth. Estimation results show that for 1% increase of
working age group, GDP decreases of 59 million RWF, certainly because working age group accounts for
every person aged between 15 and 64 while this group, in Rwanda contains a significant number persons
considered active but still dependent, for instance, students.

5. Conclusion
A closer look at core demographic variables indicates that gender equality and labor education level, as
suggested by findings, appear to be major drivers of economic growth. Although, working age group and life
expectancy are less influential on country’s economy. Population growth rate doesn’t yet have an impact.
Obviously, the variation in population growth rates is still rather limited for two past decades.
On one hand, findings confirmed that significant relationships exist between gender and economic
growth as well as education and economic growth at 5 per cent significance level then between demographic
maturity and economic growth as well as life expectancy and economic growth at 10 per cent significance
level, on the other hand, findings rejected the existence of the relationship between population growth and
economic growth.
These findings should not be seen as arguments for abandoning any efforts to improve gender equality.
Access to gender equality is a vital ingredient for women development furthermore, country’s development
(what is really needed in a developing country like Rwanda).
The researcher recommends proper planning for education and job opportunities as labor force level of
education increases to avoid unemployment and economic growth diminution; gender equality should be
strengthened but measures should be taken to mind about duties or responsibilities as far as economic
development is concerned; continue to put much efforts in sensitizing people especially youth to be aware of
and adhere to programs such as “Hanga Umurimo” that trains people to create jobs on their own, this will
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also reduce dependency ratios (especially youth and adult dependency ratios) that constitute a problem for
the whole economy; measures should be taken strengthen family planning, and reduce population growth
before it is late.

References
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Amparo Castello-Climent and Rafael Domenech, September 2006, Human capital inequality, life expectancy
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countries, Jonkoping University.
Asa Lofstrom, October 2009, Gender equality, economic growth and employment, Umea University.
Belgi Turan, November 2009, Life expectancy and economic development: Evidence from micro data,
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Bloom D. and J. Williamson. 1998. Demographic change and Economic Miracles in Emerging Asia. World
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Krueger, Alan and Mikael Lindahl (2001). "Education for Growth: Why and for Whom?" Journal of
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Stephan Klasen, November 1999, Does gender inequality reduce growth and development? Evidence from
cross-country regressions, The World Bank group.
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Appendix 1: Relationships between variables

rr== -0.36
-0.36 r==0.50
rr= 50
0.50 r = 0.96
5.E+09 5.E+09 5.E+09

4.E+09 4.E+09 4.E+09

GDP
GDP

GDP
3.E+09 3.E+09 3.E+09

2.E+09 2.E+09 2.E+09

1.E+09 1.E+09 1.E+09

-5 0 5 10 15 50 52 54 56 1.5 2.0 2.5 3.0 3.5 4.0 4.5

PGR WAG GE

r = 0.93 r = -0.92 r = 0.97

5.E+09 5.E+09 5.E+09

4.E+09 4.E+09 4.E+09

GDP
GDP

GDP
3.E+09 3.E+09 3.E+09

2.E+09 2.E+09 2.E+09

1.E+09 1.E+09 1.E+09

30 40 50 60 70 40 45 50 55 60 2 4 6 8 10 12 14

LE LFPE LFSE

Table 1: Normality Test Results

GDP PGR WAG LE LFPE LFSE LFTE
Proba(J-B) 0.463377 0.17 0.86 0.45 0.61 0.53 0.41
Observations 20 20 20 20 20 20 20

Appendix 2: Estimation Output

Sample(adjusted): 1997 2014
Dependent Variable: DGDP_2

Variable Coefficient Std. Error t-Statistic Prob.

C 5.00E+08 2.10E+08 2.374900 0.0390
DWAG_2 -59005932 29486884 -2.001091 0.0733
DL 2.07E+08 71083107 2.912453 0.0155
DM 1.15E+08 44532803 2.585296 0.0272
DLE_2 -1.24E+08 57942169 -2.145567 0.0575
DLFSE_2 -86137118 25309014 -3.403417 0.0067
DLFTE -2.47E+08 1.08E+08 -2.290523 0.0450
LFPE -12323415 4454747. -2.766356 0.0199
R-squared 0.745988 Mean dependent var 553981.7
Adjusted R-squared 0.568179 Akaike info criterion 38.34177
Durbin-Watson stat 3.100326 Schwarz criterion 38.73749
F-statistic 4.195458 Prob(F-statistic) 0.020614

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 V. N. Maniragaba et al.

Appendix Table 3a: Correlation Matrix of Variables in Levels

GDP PGR WAG DL DM LE LFPE LFSE LFTE
GDP 1.00 -0.36 0.50 -0.53 0.04 0.93 -0.92 0.98 0.98
PGR -0.36 1.00 -0.59 0.05 0.05 -0.32 0.63 -0.32 -0.27
WAG 0.50 -0.59 1.00 0.29 -0.63 0.25 -0.65 0.47 0.45
DL -0.53 0.05 0.29 1.00 -0.73 -0.75 0.37 -0.59 -0.50
DM 0.04 0.05 -0.63 -0.73 1.00 0.34 0.08 0.00 0.00
LE 0.93 -0.32 0.25 -0.75 0.34 1.00 -0.82 0.92 0.89
LFPE -0.92 0.63 -0.65 0.37 0.08 -0.82 1.00 -0.89 -0.88
LFSE 0.98 -0.32 0.47 -0.59 0.00 0.92 -0.89 1.00 0.96
LFTE 0.98 -0.27 0.45 -0.50 0.00 0.89 -0.88 0.96 1.00

Appendix Table 3b: Correlation Matrix of Variables in Levels

DGDP_2 DLE_2 DLFSE_2 DLFTE LFPE DWAG_2 PGR
DGDP_2 1 -0.09 -0.58 -0.07 0.15 0.01 -0.05
DLE_2 -0.09 1 -0.02 -0.30 -0.34 -0.77 -0.36
DLFSE_2 -0.57 -0.03 1 0.05 -0.11 -0.14 -0.00
DLFTE -0.06 -0.31 0.05 1 -0.25 -0.03 -0.04
LFPE 0.15 -0.34 -0.11 -0.25 1 0.03 0.71
DWAG_2 0.01 -0.77 -0.14 -0.03 0.03 1 0.03
PGR -0.05 -0.36 -0.00 -0.04 0.71 0.03 1

Appendix Table 2: Unit Root Test Results

ADF Critical value (5 per Stationarity
Variable cent significance level) Level Difference order
GDP -5.173967 -3.7119 0 2
PGR -12.91255 -3.0400 1 0
WAG -5.144997 -3.7119 0 2
LE -3.553649 -3.2964 0 2
LFPE -6.439169 -3.6746 0 0
LFSE -5.660694 -3.7119 0 2
LFTE -8.359470 -3.0521 0 1

Appendix Table4 (A): Population Growth and Economic Growth

Dependent Variable: DGDP_2
Included observations: 18 after adjusting endpoints
Variable Coefficient Std. Error t-Statistic Prob.
C 7020545. 29760062 0.235905 0.8165
PGR(-1) -1590356. 6129825. -0.259446 0.7986
R-squared 0.004189 Mean dependent var 553981.7
Adjusted R-squared -0.058049 S.D. dependent var 67071386
S.E. of regression 68990633 Akaike info criterion 39.04128
Sum squared resid 7.62E+16 Schwarz criterion 39.14021
Log likelihood -349.3715 F-statistic 0.067312

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