Working paper 57
This paper explores the political economy of growth in Rwanda during two decades of economic expansion under the Rwandan Patriotic Front (RPF). It builds on recent work emphasising the importance of party-owned enterprises in sustaining this progress, but goes further by analysing state-business dynamics in four key sectors of the economy: coffee, mining, construction and financial services. For each sector, the evolution of the ‘deals environment’ (Pritchett and Werker 2012) is detailed and the differential degrees of growth, liberalisation and foreign competition are explained. This detailed sectoral analysis enables us to develop a deeper understanding of how political concerns have affected Rwanda’s economic growth trajectory. The paper argues that while the Pritchett-Werker framework is a helpful starting point, the ‘deals environment’ in Rwanda has not progressed along a linear trajectory from ‘closed disordered’ to ‘open ordered’ deals as posited in the model. Instead, the maintenance of growth has involved the cultivation of carefully protected pockets of ‘closed’ deals in strategic nodes of different sectors. Moreover, the combination of rapid economic liberalisation with politically motivated ‘closed’ deals has led to a degree of continued (or renewed) disorder in some sectors, which may yet threaten growth in the long term.