Developmental State Economic Model Versus Neo-classical Principles: The Case of Rwanda and Burundi

Abstract

The purpose of this thesis is to examine the significance of the developmental state model using the economic performances of two African countries, Burundi and Rwanda. The two neighboring African countries share similar economic characteristics and face virtually same social and political challenges. In the last two decades, Burundi and Rwanda have taken two different approaches to develop their economies. Burundi is using a standard neoclassical economic model in contrast to Rwanda that is applying the developmental state model. I use the standard method of difference-in-difference and the annual data over the period 1974-2014 from the two countries to compare the similarities and differences of their economic performances in order to learn the value of the developmental state model for African economies.