Determinants of Kenyan`s Textile Exports to the Usa Under the African Growth and Opportunities Act (Agoa)

Abstract

Whereas African Growth and Opportunity Act (AGOA) provides a long list of goods that can be exported to the United States of America (USA), Kenya has not been able to take advantage of the huge market to export textile and apparel products. This paper therefore has analyzed the factors that determine Kenya’s textile exports to the United States of America under the AGOA provisions. The paper sourced secondary data for the period 1990 to 2010 from UNCTAD, World Bank database, Statistical Abstracts and Kenya’s Economic Surveys. The study used the general export model applied by Ogun (1998) and Edwards and Alves (2005) and introduced GDP for USA as a proxy to capture the demand for Kenya’s apparel exports or purchasing ability of USA citizens, employment in the textile sector, Foreign Direct Investment from USA to Kenya, Real Exchange Rate, GDP for Kenya to capture the level of infrastructure development and a dummy variable to capture the effect of AGOA on Kenya’s apparel exports to the US. The results showed that USA GDP, Kenya’s GDP, Terms of Trade, Real Exchange Rate (RER) and the dummy had a positive and significant impact on Kenya’s textile exports while FDI and employment in textile sector had a significant but negative impact on apparel exports to the USA.