Impact of Broadband Services on Economic Growth in Kenya 1992-2019

Abstract

The objective of this study sought to investigate the impact of ICT (with specific focus on broad-band services) on Kenya's economic growth. Due to the nature of the variables that have been selected, this study employed reduced Vector Autoregressive (VAR) model informed by the iden-tification challenges that exists when Ordinary Least Squares (OLS) estimates of a structural VAR result to inconsistent results. Additionally, autoregressive model, AR (2) was estimated for robust check. The study used annual time series data for the period 1992-2019 obtained from World Banks database and the Kenya National Bureau of Statistics (KNBS) publications. The findings showed that in the second lag growth in the broadband services was found to have a positive and significant effect on the economic growth in the current year. Other factors that were associated that caused significant growth in economy included the trade openness, inflation rate both at first and second lags and trade openness in the second lag. Apart from economic growth, increased performance in the broadband services was attributed to capital growth at first lag, trade openness at first lag as well as the flow of FDI stock in the country. On this basis, the study therefore pro-poses that the government should increase investments in the ICT sector and put measures in place to encourage the access to and use of broadband services and additionally ensuring policies to-wards ensuring macroeconomic stability are enforced in order to woo investors to invest in ICT sectors in Kenya.