Econometrics Analysis of Impact of International Trade on Economic Growth in Rwanda an (1990-2017)

Background: International trade is so much essential for economic growth not only in Rwanda but also worldwide because this world become a village due to globalization where one country’s people can easily buy or sell products to another country. Objectives: The objective of this study is to examine the impact of international trade on economic growth in Rwanda from 1990-to 2017. Methodology: Descriptive data analysis was used and the variable considered here are: Gross domestic product (GDP) as a proxy for economic growth, trade openness (TO), Foreign direct investment (FDI). This study was carried out using the Vector Error Correction Model (VECM) estimation method for data analysis using Econometric software (E-Views 8.0.Secondary data was used to conduct this study and the required data was collected from World Bank. Available literature has shown that international trade contributes to economic growth. Data results: Empirical investigation reveals that both trade openness (TO) and foreign direct investment (FDI) are positively related to the Gross domestic product (GDP)by 0.048617 percent to 0.193749percent respectively Conclusions: The conclusion drawn from this work is that there is a correlation between GDP and its independent variable [trade openness (TO) and foreign direct investment (FDI)]. Recommendations: This study recommends that the policymakers should improve and strengthen trade openness and foreign direct investment with the objective of striving for Rwanda's sustainable development