Impact of Foreign Direct Investment on Economic Growth in Kenya

Abstract

The impact of FDI has been studied by many scholars and most of them have come out with differing results. The proponents tend to believe that based on the studies that they have, Foreign Direct Investments boost a country’s growth as it boosts productivity and at the same time savings and revenue is created in an easier way. On the other hand, the opponents believe that Foreign Direct Investments expose a growing economy to external factors such as volatility in markets and at the same time undermines the macroeconomic factors which in turn creates some instability. The Kenyan government in the efforts to grow the economy as well as ensure it performs to the best of its ability it has always encouraged many investors to bring in funds and invest in the country. As from 2007 all the way to 2019, the Foreign Direct Investments that were made in the country have been growing gradually. The study found out that the FDIs have a positive impact towards the growth of the Kenyan economy. This is because most of the funds have been directed towards human capital capacity building which makes employees more valuable. Apart from this, the production industry has also been improved meaning that the Kenyan economy that is in the infrastructure and manufacturing sectors has been boosted in the period of the study. however, it is good to recognize that is not only FDIs that impact economic growth but there are other factors that aid it in making the observed impact.