Effect of Kenya's foreign policy on foreign direct investment in Kenya

Abstract

This study focused on the effect of Kenya’s foreign policy on foreign direct investment in Kenya. It was guided by five key objectives which included: To examine the effect of the peace diplomacy pillar on FDI in Kenya; assess the impact of the economic diplomacy pillar on FDI in Kenya; to determine effect of Diaspora diplomacy pillar on FDI in Kenya; to examine the effect of the environmental diplomacy pillar on foreign direct investment in Kenya and to look into the effect of the cultural diplomacy pillar on FDI in Kenya. This study adopted a mixture of descriptive and explanatory research designs targeting program officers serving in the Ministry of Foreign Affairs and International Trade and the National Treasury tasked with the responsibility of handling foreign direct investments and handling policy issues. By use of both primary and secondary data, the data was analyzed by use of the (SPSS) version 23.0. Descriptive and inferential statistics were used to analyze the data. It was revealed that there was a positive relationship (R= 0.752) between the study variables. The study further revealed that 56.5 percent of FDI in Kenya could was a result of Kenya’s foreign policy. It is hereby evident from this study that at 95% confidence level, the variables produce statistically significant values and can be relied on to explain FDI in Kenya. Key recommendations emanating from this include: The government should put in place concerted effort to ensure that peace and security are enhanced within its borders. This will ensure that a peaceful environment to business; the government of Kenya should implement Structural Adjustment Programs to the fullest with a view of establishing an economic hub in the region for investors; the government should strengthen the monitoring and evaluation function of Kenya’s Vision 2030 to spear head key flagship projects driving economic growth; there is a great need to revise Kenya’s National Diaspora Policy to enable Kenyans living abroad to participate in national development; relevant government agencies should implement multilateral environmental agreements that attract foreign investors the government should develop a policy to guide Kenyans in respecting and recognizing each other’s cultural diversity as an incentive for foreign investors.