The post-independence story of Burundi and Rwanda is very much
. The two neighboring countries are of similar geographical size, as well as of similar population size. The resource endowments and ethnic make-up of the countries follow suit, by being very similar, almost identical in terms of ethnicity. Both countries have also had their fair share of violence, most often ethnic in its nature. Yet despite this, the two countries have had very different economic outcomes, as is evidenced by the graph below. Since 1975, Rwanda has consistently outperformed
Burundi (at times greatly). Even when Rwanda suffered through genocide, its gross domestic product barely dipped below that of Burundi’s, and only for a very short time, before it rebounded even stronger than before. We investigate the effects of political and economic variables on the GDP of each of these countries.
GDP and aid seem correlated particularly in later years for Burundi.
Increases in aid are correlated with increases in GDP.
The huge spike in aid right after the genocide (which, since it occurred during just three months in 1994, is in the same year) offers an explanation to the quick rebound of Rwanda’s GDP. The correlation seems to be higher for
Rwanda which may suggest that aid played a major role in the recovery and growth in Rwanda’s economy.
First, we perform a thick analysis of the differences and similarities between Burundi and Rwanda. Specifically, we investigate the demographic structure, government system, agricultural industry, presence of coups and violence, aid, and FDI in depth for each country. Our goal is to determine how each of these factors affects the level of development in each country. Given Rwanda’s growing economy we also want to discern whether any of the factors has profoundly different effects across the two countries.
Second, using data from the World Bank and the Cross National Time
Series Database we focus on the effects of aid, foreign direct investment, polity, coups, exports, and relative political capacity on the GDP per capita of each country. Our goal is to discern the causes for the different growth patterns evidenced in Burundi and Rwanda.
Burundi and Rwanda have similar ethnic compositions. In both countries the Hutus make up 85% of the population; the Tutsis are about 14% of the population, and the Twa make about 1%. In general, up until just before independence, the Tutsi had the upper hand in the governance of the two countries. During Belgian rule the perception and treatment of the two groups were actively differentiated so as to give the Belgians a local pool of what one could, during this time period, legitimately call “racially superior” workers. In the 1990s President Habyariamana increased divisions between the Hutu and Tutsis and promoted fear and hatred in order to keep himself and the elite in power. This is what led to the
Rwandan Genocide. Burundi has a similar history. Violence broke out between Hutus and Tutsis after Burundi’s first democratically elected president was assassinated. The tensions are still evident today as riots emerged after President Pierre Nkurunuziza announced his candidacy for a third term.
The recent protests in Burundi highlight the differences between the governments of Burundi and Rwanda, which are directly linked to the demographic and ethnic makeup of the countries. Lemarchand applied the concept of consociationalism finds that “power sharing is unlikely to produce miracles absent a coherent, functioning state system.” It has been further argued that international actors should step in allow for the incorporation of disenfranchised or disgruntled groups while holding violent groups accountable. It is simple to make a compelling case that international actors were more willing to intervene and create order in
Rwanda than Burundi. Since the genocide Rwanda received substantially more aid than Burundi. Thus our hypothesis is that aid has a substantial impact on Rwanda’s economy while Burundi has managed to do relatively well with limited international support.
Net government expenditure is greater than net international flows.
For Rwanda net international flows is greater than net government expenditure. International flows to Rwanda are significantly higher than flows to Burundi
RESEARCH POSTER PRESENTATION DESIGN © 2012 www.PosterPresentations.com
The regression output shows that aid is correlated with GDP per capita, and it is significant at the 1% level. Essentially, $1.00 of aid gives a return of $.93 in GDP per capita. Coups and remittances are negatively correlated with GDP per capita and are significant. Exports are positive and significant at the 10% level.
In the regression for Burundi the sign on aid is negative and it is not statistically significant suggesting a different dynamic than was present in Rwanda. Exports are positively correlated with
GDP per capita and statistically significant. Conflict and coups are again negatively correlated with GDP per capita and significant. Polity is positive and significant suggesting that as
Burundi becomes more democratic GDP per capita increases.
The economic drivers in the two countries vary greatly.
• Aid seems to have a “propping up” effect, especially for Rwanda.
•
The large sums of aid makes it harder to distinguish separate effects in the economy, especially for Rwanda.
If Kagame decides to try to hold on to power, the results can be devastating.
•
Will the international community withhold aid if violence breaks out?
This can have serious effects on the economy
•
If violence does break out, the disruption would be greater and the subsequent recovery would be harder, since the agricultural sector has been significantly reduced.
The unrest that Burundi has seen recently is sadly not uncharacteristic of
Burundi’s history. Unfortunately, a return of violence would be more of the norm, than an exception.
•
The violence seen in the last couple of years have been more intrafaction, than the previous Hutu vs. Tutsi dynamic.
Arbetman-Rabinowitz, Marina; Ali Fisunoglu; Jacek Kugler; Mark
Abdollahian; Kristin Johnson; Kyungkook Kang; Zining Yang ,
"Replication data for: Relative Political Capacity Dataset", 2013, http://hdl.handle.net/1902.1/16845 Transresearch Consortium [Distributor]
V4 [Version]
Banks, Arthur S., Wilson, Kenneth A. Cross-National Time-Series Data
Archive. Databanks International. 2014. Jerusalem, Israel; see http://www.databanksinternational.com
CIA Factbook, Burundi, accessed
12/13/14 https://www.cia.gov/library/publications/the-worldfactbook/geos/by.html
CIA Factbook, Rwanda, accessed
12/13/14 https://www.cia.gov/library/publications/the-worldfactbook/geos/rw.html
Kelsall, Tim.
. London: Zed Books, 2013.
Kwasi Fosu, Augustin. "The African Economic Growth Record, and the
Roles of Policy Syndromes and Governance." In
, 175-218. New
York: Oxford University Press, 2012.
Lemarchand, Rene. "Consociationalism and Power Sharing in Africa:
Rwanda, Burundi, and the Democratic Republic of the Congo."
106, no. 422 (2006): 1-20.
Lijphart, Arendt.
(Yale University Press, New Haven, CT, 1977).
Serneels, Pieter, and Marijke Verpoorten. "The Impact of Armed Conflict on Economic Performance Evidence from Rwanda."
, 2013.
Uvin, Peter. "Ethnicity and Power in Burundi and Rwanda: Different Paths to Mass Violence."
31, no. 3 (1999): 253-71.
World Development Indicators, The World Bank, 2014. http://data.worldbank.org/datacatalog/world-development-indicators
Contact:
Thank You to Professor Pierre Englebert