Abstract: The purpose of this this research project is to apply principal component analysis technique for qualification and quantification of the contribution of key foreign exchange earners in Rwanda (1999-2013). This research project provides details of principal component analysis method that helps researcher to restructure data sets specifically by reducing the number of variables. Such an approach is often called “Principal Component Analysis” or sometimes a “data reduction” or “dimensionality reduction” technique. This means that we start off with a set of variables, let say twenty; these appear to be too many variables to deal with, which in practice renders any economic forecasting alongside statistical analysis difficult if not accurate. Therefore, applying principal component analysis, this research aims at transforming a set of corrected variables into a set of uncorrected variables without any loss of information. By the end of the process we have measured the proportion of variance attributed to each eigenvalue produced associated with corresponding principal component and then interpret the PCs and finally predicted the scores. As Rwanda exports many products to international markets, it is important to qualify and quantify the contribution of each product to the reserves of foreign exchanges of Rwanda; which was the purpose of research project. On the basis of the research results, it was concluded that some products (cassiterite, coltan, wolframite and coffee) have significantly contributed on the reserves of foreign exchanges in Rwanda. Hence, it is for the Government, Private Sector or Stakeholders to allocate more funds to these to operate and produce more.
Keywords: Foreign Exchange Earners, Rwanda exports, Principal Component Analysis.
Title: Applying Principal Component Analysis for Qualification and Quantification of the Contribution of Key Foreign Exchange Earners in Rwanda (1999-2013)
Author: Muhire Didier, Dr. Mung'atu K. Joseph, Dr. Ndengo Marcel
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
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