An empirical analysis of manufactured exports performance in Kenya: 1980-2010
Abstract
This study analyses the manufactured exports performance in Kenya during the period from
1980 to 2010. The rate of manufacturing exports growth in the past 20 years has been
fluctuating and exports structure remain skewed towards primary unprocessed commodities. A
key question for policy makers is why substantive industrial and trade policy reforms produced
limited response in terms of the growth and diversification of exports. In line with the
international trade and economic theory, the paper focuses on the investment GDP ratio, foreign
income, real exchange rate, gross domestic product, consumer price index and export processing
zones as key determinants for manufactured exports performance in Kenya. Using annual data
this paper analyses Kenya's export performance in a long run Linear equation framework.
Results suggest that the real appreciation of the shilling and consumer price index adversely
effects Kenya's export performance. Investment GDP ratio has a positive effect on manufactured
exports and is statistically significant. The results with regard to contribution of economic
processing zones to exports of manufactured goods shows a positive relationship with strong
causation for EPZ on manufactured exports. The key recommendation from this paper is that
there is a need to review the current capital formation strategy and export processing zone
regime.
Citation
School Of EconomicsPublisher
University of Nairobi