The impact of the shift from western to eastern trade partners on Kenya’s balance of payments
Abstract
A country’s Balance of Payments, a reflection of the state of its economic transactions
(positive or negative) with the rest of the world, is heavily impacted by its trade partners.
Research on the impact of choice of trade partners are relatively few. This research study
investigated the effect of changing trade partners (from West to East) on Kenya’s
Balance of Payments as measured by Balance of Trade (imports and exports) and
Balance of Payments. The study used a sample of seven countries from the West and
seven from the East. Using annual time series trade data for the period 1997 to 2011 the
study evaluated trade volume trends with a view to ascertain if first, Kenya had changed
trade partners; and two, if this change had had any impact on its Balance of Payments;
and if yes, to ascertain if that impact was positive or negative. Primary data was collected
through questionnaires. Secondary data was collected from Kenya National Bureau of
Statistics (KNBS). Regression analysis, correlation analysis and descriptive statistics
were used to analyze the data collected using statistical package for social sciences
(SPSS) and Microsoft Excel. The research found that the Balance of Trade with Eastern
trading partners is worse that the Balance of Trade with Western partners. In addition, the
research clearly demonstrated that there has been a shift from Western trading partners to
Eastern trading partners mainly for imports and that this has resulted in a corresponding
worsening of Kenya’s Balance of Payments.
Publisher
University of Nairobi