Foreign trade and economic growth: The Kenyan experience. An empirical and econometric investigation

Richard Michieka Nyamwange, Fordham University


The present study attempts to determine whether foreign trade contributes to economic growth in Kenya. One of the most controversial topics found in theoretical and policy discussions of the literature on economic growth is the relationship between foreign trade and economic growth. This investigation focuses directly on the foreign trade and economic growth relationship in Kenya. Its purpose is to examine and evaluate the hypothesis that foreign trade plays a positive role in the economic development of Kenya. The study covers the period 1961-87, and analyzes characteristics of the Kenyan economy closely associated with the economic structure, population on growth, the role of the external sector, and the reliance on external resources. The study discusses export and import patterns, in Kenya. Within this framework, export and import composition and direction of trade are explored. This dissertation examines export instability, in general, in developing countries, and focuses on Kenya, as a case study. The multiple regression technique has been applied to test the causes and effects of export instability on Kenya's economic development. An export instability index, as well as concentration (commodity and geographical) index based on the Gini-Hirshman coefficient, have been constructed for Kenya. Some conclusions reached by the presetn study are: (1) Regression analysis shows that there is a significant positive relationship between commodity concentration (coffee) and export instability in Kenya; (2) Export instability does not have a negative impact on the economic growth of Kenya. That is, export instability does not interfere with the development process; and (3) Foreign trade contributes positively to the growth of the economy. (4) Foreign aid and loans have played a significant role in the growth of Kenyan economy.

Subject Area

Economic history|Business costs|African history

Recommended Citation

Nyamwange, Richard Michieka, "Foreign trade and economic growth: The Kenyan experience. An empirical and econometric investigation" (1991). ETD Collection for Fordham University. AAI9127040.