Motives and Determinants of China’s Foreign Direct Investment in Rwanda

Abstract

In the recent past many developing and emerging countries have undertaken a dramatic shift by moving from isolationist, import substitution police to open market policies aimed at increasing foreign direct investment. The main objective of this paper is to investigate if the implementation of China foreign direct investment in Rwanda will have a positive effect in the country. In this paper, we survey some theoretical and empirical literature on the motive and determinant of Chine FDI. Strategic, behavioral and economic consideration appears to the basic motivations for FDIs. In fact the main determinants of FDIs consist of market size variable, labor market conditions, institutional variables, macroeconomic policy variable and global supply of FDIs. This paper states contribution of China FDI’s to economic development of Rwanda and the mainly highlights the tangible benefits that FDI’s produces both in China and Rwanda. Finally we will propose policy suggestion for Rwanda to attract better and utilize FDI’s from China. This paper is no doubt a contribution to the existing literature on FDI and would therefore guide policy reforms on China FDI’s in most developing countries especial in Rwanda.