dc.description.abstract | The view that strong economic performance can be export led has been explored
critically on the merchandise exports front however service exports, whose importance
is seen to have increased in the last decade, have received little attention.
Understanding the role of service exports in an economy is essential in considering
service exports as a possible source of growth. This study was conducted to empirically
investigate the link between exports of services and economic growth in Kenya and if
such a link exists the causal relationship, analyzing time series data for the period
1980-2018, from World Bank data base and the Kenya Bureau of statistics publications,
using Vector Error Correction Model and Toda and Yamamoto augmented Granger
causality test. The results indicate presence of a long run relationship between the
variables and a short run relationship between, gross capital formation and service
exports with GDP per capita while export of goods and compensation of employees did
not show any short run association with per capita GDP. The results also indicate that
a bidirectional causality exists between gross capital formation, export of goods and
compensation of employees with GDP per capita but only a unidirectional causality
from service exports to GDP per capita exists. Therefore policies to encourage service
exports such as investment in research and development to improve Kenya’s position
in world service market, improvement in terms of trade, increase FDI in the service
sector and human capital improvement through education and training could be an
important drivers of its economic growth. | en_US |