Impact of inflation volatility and economic growth on foreign direct investment in Kenya

Abstract

Foreign Direct Investment (FDI) plays a very significant role in financial growth and development in Kenya. Economic growth and inflation are some of the factors assumed to have an influence on FDI in Kenya. The project therefore investigates the impact of the two factors on FDI. Data was obtained from the World Bank website for 1980-2012. FDI is taken as the dependent variable whereas GDP and inflation are taken as independent variables. A linear regression analysis was used on the data to determine the relationship between inflation, GDP and FDI flows. The results suggest that there is no relationship between foreign direct investment and inflation, whereas there is a negative relationship exists between foreign direct investment and gross domestic product.