The relationship between foreign direct investments (FDIs) and economic growth in Kenya

Abstract

The role of foreign direct investments in promoting economic growth has been the subject of much debate among development specialists, researchers, aid donors as well as recipients in general and Kenya in particular. In spite of this, there are only few empirical studies that investigate the contributions of foreign direct investments to economic growth in Kenya.

This study explores the relationship between foreign direct investments and economic growth in Kenya using data that spans from 2000 to 2009 and establishing through causal study if changes in one variable cause changes in the other.

The results show that foreign direct investments significantly contribute to the current level of economic growth. The findings imply that Kenya could enhance its economic growth by effectively managing funds from aid and by strategically strengthening investment plans.