The paper endeavoured to ascertain the effect of free trade agreement on household welfare by
analysing peace basket exports through AGOA in Rwanda. The study analysed the effect on
both macro and micro levels using data collected through an administered questionnaire. On the
macro level, the study evaluated export volumes of Rwandan handicraft to different markets in
comparison to the US market for over nine years (2002-2010) basing on data from Rwanda
customs. AGOA helped weavers and exporters of peace baskets to further expand and access
the US market even though there were already plans under way by the government to develop
handicraft sector in the country. On the micro level using bivariate and multiple regression
analyses; comparisons were made between weavers and non-weavers and between US and Japan
market weavers to determine the effect of the Act on the household weaver’s welfare. The
sample comprised of 150 respondents; 50 non weavers (control group) and 100 weavers (treated
group) in three districts of Kigali province; Nyarugenege, Kicukiro and Gasabo. Results show
that non-weavers made to some level a valid control group for weavers (treated group) basing on
the sample’s demographic characteristics.
Furthermore, results also indicate a significant difference between weavers and non-weavers
and between US and Japan market weavers basing on their socio-economic conditions like
monthly income earned, hours worked per day, monthly savings, future and current financial
situation and future and current provision of food and other basic necessities. This is attributed
to a certain extent the prospect of accessing the US market through AGOA that has enabled
weavers and exporters to not only earn an income and provision of employment that in return
has had an effect on the weaver’s welfare. At the same time they have also benefited from
serving a demanding and challenging market that has enabled them to some degree modernize
and perfecting their products which has led to creation of new designs, new products and
expansion of their production. The study also indicates that it’s not viable to generalize the
research results on all weavers due to difference in poverty level in the country particularly
between urban and rural areas indicating a need for further research. But all the same, free
market access for non-traditional exports with an increasing return to scale to some extent has
had a significant effect on household’s welfare and the country at large in a poor resource
country with limited and declining land productivity