| dc.description.abstract | The importance of investment is a prime factor in maintaining and expanding the capital
stock and production capacity of any economy cannot be overstated. Kenya being a
country endeavoring to be a middle income country by 2030, investment is believed to be
a channel though which this can be realized. This study was done to establish the
relationship between investment and economic growth in Kenya. Data that was used was
that of GDP values and investment for the period 1993-2012 collected from the Kenya
National Bureau of Statistics. The relationship between GDP and investment was
analyzed using regression of the annual growth rate in GDP as the dependent variable and
Investment rate as the independent variable. The significance of the constant term and the
coefficient from the regression was tested using the t-test; the significance of the
regression model was done using the F-test; correlation was tested using the Pearson’s
correlation coefficient, while the coefficient of determination was used to determine how
much variation in GDP rate was explained by variation in investment rate. The level of
accuracy for this study was 95%. The results show low correlation between GDP rate and
Investment rate. Both the constant term and the coefficient of investment in the
regression were positive, but statistically insignificant. The regression model was found
to be statistically insignificant and the variation in GDP rate was poorly explained by the
variation in investment rate. The study, therefore concluded a weak positive relationship
between investment and economic growth indicating that the current structure of
investment did not strongly drive economic growth. The study, therefore, recommends
that policy makers establish the investment behaviour of investors in Kenya concerning
which investments the put their money in and encouragement done to make Kenyans
focus their investment efforts towards those assets | en |
