Do Earnings From Food Exports Improve Kenya’s Current Account Balance?
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Date
2021-11Author
Wairoma, Michael O
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
This study focused on the influence food export earnings have on current account balance
in Kenya. It encompassed five independent variables namely; food export earnings, balance
on services, foreign exchange rate, current transfers and income per capita with its main
objective being to determine whether food export earnings can improve Kenya’s current
account balance. The study applied time series analysis using Ordinary Least Squares
method. The findings from the analysis revealed balance on services, food export earnings
and foreign exchange rate exhibit long run association characteristics through unit root
and cointegration test.
It was further established from the analysis that there was a negative coefficient in Vector
Error Correction Model which revealed long run causality running from individual lagged
variables of balance on services, food export earnings, foreign exchange rate to current
account deficit.
The study’s regression analysis established that all the variables (balance on services
(0.975), food export earnings (0.823) and foreign exchange rate (0.637)) were insignificant
with their p-values being more than 0.05 per cent when tested at 95 per cent confidence
level. The insignificance in all the variables in the study might be attributed to the use of
proxy data.
The study recommended the need for the government to adopt policies that can enhance
earnings from food exports and balance on services in order to curtail the growing current
account deficit. These policies include, value addition and diversification of food exports as
well as improvement of infrastructure to aid the development of the service sector.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
- School of Economics [235]
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