Refugee Influx and Its Impact on Economic Growth in Kenya

Abstract

Kenya has over the years competed well within the global economic market and experienced growth of its economy which is expected to continue, especially with the new constitutional dispensation. However, it still continues to have its share of setbacks, which may be a hinderance to such desired growth. The general objective of this study was to establish the impact of refugee influx on economic growth in Kenya. Specifically, this study sought to; establish the short run impact of refugee influx on economic growth in Kenya, determine the long run impact of refugee influx on economic growth in Kenya and establish the extent to which non-refugee related factors affect economic growth. The study adopted a time series methodology. Based on the findings, the study concluded that there was at least one co-integrating equation in the long run. It was also concluded that the lag GDP (denoting the previous period GDP) affects the current period GDP positively. This implies a higher GDP in the previous period leads to an increase in the current period GDP. Results also indicated that both in the long run and short run the number of refugees had a negative and significant relationship with GDP. Hence, an increase in the number of refugees resulted to a decrease in GDP. The results indicated that both in the long run and short run, labour had a positive and significant relationship with the GDP. Therefore, an increase in labour resulted to an increase in GDP. The other variables were insignificant both in the short run and long run which implies that change in capital and human capital will have no effect on GDP in the shortrun and longrun that could be due to the impact of inflation, Barro (1995). The study gave two recommendations based on the findings. First given that the effect of the number of refugees on GDP was negative and significant, it is recommended that Kenya should adopt strategies which aim at minimizing the number of refugees in a bid to increase aggregate economic growth. Second, given that the effect of labor on GDP was positive and significant, it is recommended that Kenya should encourage self employment, investments and innovation since increase in development, will call for increased labour force resulting in an increase in the aggregate GDP. Key words: Refugee Influx, Economic Growth, Human Capital, Non Human Capital and Labour