Determinants of Kenyan Exports: a gravity model approach
Under the Kenya's blue print Vision 2030, the government identified marketing as a challenge to the agricultural sector. Efforts to maintain existing markets and create new ones to increase Kenya's bargaining power, and value addition in agriculture are emphasized. Hence, it is envisaged that Kenya will export value-added goods to regional and global markets. The development of this strategy will contribute towards conquering new markets and export expansion. This paper analyses the determinants of exports, Kenya's major export destinations and the unexploited markets using the gravity model approach. Analysis show that Kenya's exports highly depend on foreign demand, the importer's GDP and population. Transportation costs are found to influence Kenya's exports negatively, hence better off trading with her neighboring countries. The analysis also showed that there is unexploited export potential among some of Kenya's export markets, of which, if fully exploited, can contribute to the achievement of the agricultural sector's short-term goals of the Vision 2030.