Total Factor Productivity And Kenya’s Economic Growth

Abstract

This study examined empirically the role of total factor productivity over the years in shaping Kenya’s GDP growth using data from 1985 to 2018. The impact of factors of production- labour, capital and human capital on economic growth was also examined. The study used the Autoregressive Distributed Lag Model to carry out the analysis. According to the ARDL model, there was no cointegration between GDP and the independent variables. The study results showed that all the factors of production used in this study (labour, capital and human capital) were positively correlated to GDP and statistically significant. TFP, which was estimated as the constant in the model, was found to be statistically significant and the most important source of economic growth in Kenya. Arising from the analysis, we concluded that Kenya should put more emphasis on the policies that increase TFP growth or technological advancement in the country in order to increase economic growth.