Effect Of Trade Openness On Unemployment Rate In Kenya

Abstract

This study’s purpose is to examine the association between trade openness and unemployment rate in Kenya. When trade openness increases in Kenya, unemployment rate is evidenced to be also high. It is hypothesized that in the context of third world countries in the African continent, trade openness is negatively associated with unemployment. The study employed secondary data which was collected from World Bank. This time series data range from 1970 to 2017 and multiple linear regression model was used to test the hypotheses. The study has affirmed that trade openness has a non-negative and significant effect on unemployment in the Kenyan economy. Results have also showed that both imports and exports have a negative effect on Kenya’s unemployment, with imports being insignificant. Recommended policies should focus on encouraging Kenyan exports and restricting foreign workers.