Determinants of Capacity Utilization Among Kenyan Manufacturing Firms
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Date
2005-09Author
Muhu, Humphrey N
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The growth in the manufacturing sector is a very important propelling force in the
economic growth of any nation because manufacturing enterprises have strong
forward and backward linkages with other sectors of the economy. This therefore
calls for the need to have faster rates of growth in output and employment. This
can not be achieved if the installed plant capacity is not fully utilized. However, it
is generally known that there is widespread underutilization of capacity utilization
among the Kenyan manufacturing sector.
The major aims for the study were to identify the major factors which explain
capacity utilization in the manufacturing sector and determine the effects they
have on capacity utilization. This study tries also to suggest measures that will
ensure fuller rate of capacity utilization and consequently accelerate the growth of
the manufacturing sector.
Major findings from the study are that:
(i) Capital stock, firm performance and input constraints all have
significant negative influence on capacity utilization;
(ii) Size of firms given by the number of employees a firm has, firm
productivity, age of firm and ownership structure have positive
influence on capacity utilization though not necessary significant.
In conclusion, empirical validated policies are indispensable for the fuller
utilization of capacity for the sector to achieve sustainable growth. Broad
based policies that encourage exports, revitalizes agricultural sector,
encourages privatization on public enterprises, enhances governance and
improves general macro economic stability are needed.
Citation
Masters thesis University of Nairobi (2005)Publisher
University of Nairobi Department of Economics