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Family planning, growth and income distribution in Rwanda: SAM multiplier and graph-theoretic path analysis

Temel, Tugrul (2011): Family planning, growth and income distribution in Rwanda: SAM multiplier and graph-theoretic path analysis.

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Abstract

This paper examines the linkages among family planning, sectoral growth and income distribution in Rwanda. Drawing on the 2006 SAM accounting multipliers, macroeconomic e¤ects of alternative income policies are evaluated. Furthermore, the high and low-income gain pathways are identi�ed by applying the graph-theoretic path analysis. The following �ndings are noted. The rural income gain spreads over the entire economy, whereas the urban income gain largely remains within urban areas, suggesting relatively larger income multiplier e¤ects of rural development policies. Second, investing in education, health and family planning promises a signi�cant increase in agricultural production, which in turn creates considerable employment in rural areas. Targeted rural development policies thus seem to be the best strategy to bring growth and harmoniously improve income distribution. Third, a unit increase in the demand for family planning-health commodities generates 60% more income for the urban-Kigali households than rural households. Finally,a unit increase in the family planning-health demand raises agricultural production by 1.3 unit, which is followed by 1.2 unit increase in service production and by 0.74 unit increase in manufacturing production. To sum up, investing in family planning-health is a viable strategy to promote agricultural growth and reduce poverty through employment created in the rural sector.

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