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RWANDA 167


ing shared growth and poverty reduction? To address these questions, we apply the recursive dynamic computable general equilibrium (DCGE) model described in Chapter 2 to the Rwandan economy. The third question is addressed by using a combination of cross-country analysis and detailed country-specifi c investment costing and analysis. The latter is unique to the Rwandan case study and provides an alternative approach to either the top-down or full integration approaches used in the other country studies in this volume. The chapter is structured as follows. We fi rst describe the structure and past


performance of the agricultural sector in Rwanda and review the country’s main agricultural and development strategies. We then describe the data sources used to calibrate the Rwandan DCGE model and describe some “stylized facts” about Rwanda’s agricultural sector that emerge from this new economywide database. The model results are then presented for the baseline growth scenario, the accelerated agricultural growth scenarios, and the detailed investment analysis. The fi nal section draws together our fi ndings from the Rwandan case study and identifi es policy options for realizing agricultural growth and poverty reduction.


Agriculture in Rwanda


Agriculture’s Economic Performance Agriculture features prominently in the Rwandan economy and accounts for about two-fi fths of total GDP. Agricultural commodities, mainly tea and coffee, generate 70–90 percent of total export revenues. The modest production gains achieved in coffee and tea in recent years have allowed Rwanda to broaden its revenue base, but the per capita value of commodity exports remains far lower than the average for Sub-Saharan Africa. In addition to its importance for food security, agriculture is also the largest source of employment in Rwanda and is the country’s main com- parative advantage. Experiences in other countries have also shown that agricultural productivity growth is the primary driver of poverty reduction, both through its direct effects on farmers’ incomes and through its indirect effect on the reduction of food prices (Thirtle, Lin, and Piesse 2003; Byerlee, Diao, and Jackson 2005; Bezemer and Headey 2008). Despite agriculture’s important role in Rwanda, the sector faces huge chal-


lenges. The recent performance of Rwanda’s agricultural sector has been disappoint- ing. Productivity in many staple crops and the livestock sector has remained fl at, while the average farm size has declined. With many rural households surviving on subsistence farming, and few growing commercial crops, income growth is stagnant for many farmers. Furthermore, Rwanda is the most densely populated country in Sub-Saharan Africa, with 574 inhabitants per square kilometer of arable land even


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