Exports and economic growth the case of Kenya
Economic growth is a phenomenon that has been subjected to many studies by economists. The overriding consideration of the many studies on economic growth has been to analyse how economic growth can be influenced positively for the improved welfare of society and the wealth of nations. Economic growth is a key variable for gauging the economic and social wellbeing of nations. This research paper had an objective of assessing whether manufactured exports have been influencing economic growth overtime in Kenya. Other variables studied in relation to their influence on economic growth were; other exports other than manufactured exports, imports and terms of trade. The period of study was 1970 -2007. Data on manufactured exports, non-manufactured exports, imports and terms of trade for the period 1970-2007 was used to test their causality on real GDP. Unit roots tests on the data were conducted using Augmented Dickey-Fuller method while the Engle-Granger method was used to test for cointegration. The causality test was conducted using the Granger causality method. The findings revealed that manufactured exports have not had significant impact on economic growth and therefore Kenya's manufactured exports have not Granger-caused economic growth over the period of study. However there was found to be bi-directional causality between imports and manufactured exports. These fmdings do not suggest that manufactured exports are less important in influencing and determining the direction of economic growth. Manufactured output and exports are important in the matrix of growth as has been demonstrated by many world economies. It is therefore critical for the government of Kenya and policy makers to work towards initiating and accelerating policies that will improve the quantity, quality and value of manufactured output and exports in the overall GDP contribution, while drawing lessons from the Asian Tigers.