Presentation by Yoichiro Ishihara, Economist at the World Bank Rwanda Country Office during the 5th Annual Research Conference of IPAR-Rwanda.

1. Yoichiro Ishihara
Senior Economist
IPAR 5th Annual Research
Conference
Kigali, Rwanda, Mar 2016
Macroeconomic Resilience in Rwanda

2. In this presentation, I will
2
 conceptualize risk, vulnerability and resilience.
 attempt to estimate Rwanda’s resilience using the
concept.
 argue Rwanda’s resilience based on the estimate.

3. Risk, Vulnerability and Resilience
Conceptual Framework (1)
3
Risk
of a country
being adversely
affected by
external shocks
Exposure
of a country to external
shocks arising from
intrinsic features of the
economy
Copying Ability
Enabling the country to
withstand or bounce back
from external shocks
Vulnerability Resilience
Inherent or Permanent
and not subject to policy or
governance
 Economic openness
 Export concentration
 Dependence on
strategic imports
Nurtured
and subject to policy or
governance
 Good governance
 Sound macroeconomic
management
 Market efficiency
 Social cohesion
= -
Source: Briguglio, L, Cordina, G, and Vella, S (2008)

4. Risk, Vulnerability and Resilience
Conceptual Framework (2)
4Source: Adopted from Briguglio, L, Cordina, G, and Vella, S (2008)
I. Worst Case
II. Self-Made
III. Prodigal-
Son
IV. Best-Case
High
Vulnerability
Low
Vulnerability
High Resilience
Low Resilience

5. Risk, Vulnerability and Resilience
Subjects and Indicators (3)
5
Subjects Indicators
Vulnerability  Economic openness
 Export concentration
 Dependence on
strategic imports
 Trade (%GDP)
 Concentration index
 Energy, food and industrial
supplies imports (% GDP)
Resilience  Good governance
 Sound macroeconomic
management
 Market efficiency
 Social cohesion
 Rule of law
 Fiscal deficit, inflation and
unemployment, and external debt
 Regulation of credit and labor
 Adult literacy and life expectancy
Source: Modified from Briguglio, L, Cordina, G, and Vella, S (2008)
These indicators are standardized and aggregated with a non-weighted basis

6. Application to Rwanda’s Assessment
Constructing Indicators
6
Indicator Year Value Standardize
Score
Vulnerability Trade (% GDP) 2010-14 44.4% -0.98
Exp concentration 2010-14 0.4 0.58
Resilience
(1) Macroeconomic Fiscal balance (%
GDP)
2008-13 -1.4% 0.17
Unemployment 2010-14 0.6% 1.32
Inflation 2010-14 4.7% -0.05
External debt (%
GDP)
2010-14 20.4% 0.87
(2) Microeconomic Credit regulation 2013 8.5 0.01
Labor market 2013 8.4 1.39
(3) Governance Rule of Law 2014 0.1 -0.01
(4) Social dev Adult literacy (%) 2010-14 67.1% -0.94
Life expectancy 62.0 years -0.95

7. Application to Rwanda’s Assessment
Rwanda falls into “Best-Case”
7
-15
-10
-5
0
5
10
15
-3 -2 -1 0 1 2 3 4 5 6
Singapore
High Vulnerability
High Resilience
Rwanda

8. Application to Rwanda’s Assessment
Relationship with the stage of development
8
-3
-2
-1
0
1
2
3
4
5
6
100 1,000 10,000 100,000 1,000,000
High Vulnerability
GDP per capita
Weak relationship between GDP per
capita and vulnerability
-15
-10
-5
0
5
10
100 1,000 10,000 100,000 1,000,000
High Resilience
GDP per capita
Strong relationship between GDP per
capita and resilience
Rwanda
Rwanda

9. Implication to Rwanda’s Development
Room to reducing vulnerability and strengthen resilience
9
8.4%8.5%
13.2%
2.2%
7.5%
9.4%9.2%
7.6%
11.2%
6.3%
7.3%7.9%
8.8%
4.7%
7.0%6.9%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Agriculture Industry Services GDP

10. Implication to Rwanda’s Development
Towards lower vulnerability
10
33%
19%
10% 11%
22%
25%
9%
13%
32%
29%
34% 21%
6%
21%
20%
23%
7% 6%
28% 32%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2004 2009 2014 2015
Coffee Tea Minerals Others Reexports
5% 5% 5% 5% 6%
4% 4% 6% 7% 8% 8% 7%
15% 16% 18%
20%
24%
23%
25%
29% 29%
30% 30%
29%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Exports Imports
Slow progress on export
diversification (share in goods
exports)
Imports have lead increase in the
exposure to the rest of the world
(% GDP)

11. Implication to Rwanda’s Development
Towards strengthening resilience
11
Rule of Law (# from Worldwide
Governance Indicators)
Macroeconomic stability has been
attained recently
-2.0
-1.8
-1.6
-1.4
-1.2
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
Rwanda Kenya Tanzania Uganda
0
20
40
60
80
100
120
140
-5
0
5
10
15
20
25
Inflation (left) External debt (% GDP, right)

12. Thank you very much
For further information
World Bank’s Rwanda country page
(http://www.worldbank.org/en/country/rwanda)
Facebook
(https://www.facebook.com/search/top/?q=world%20bank%20rwand
a)