Effect of Total Factor Productivity on Economic Growth in Kenya:An Empirical Analysis
Journal Title: IOSR Journal of Economics and Finance (IOSR-JEF) - Year 2018, Vol 9, Issue 6
Abstract
The purpose of the study was to build a model to explain the effect of Total Factor Productivity on economic growth in Kenya for the period 1970-2015 after accounting for labour and capital productivity. ARDL bounds test of co-integration is employed and the Error Correction Model reveals that the Total Factor Productivity Components of Foreign Aid and Financial Development have insignificant effect on economic growth and null hypotheses are accepted, while Foreign Direct Investment has significant effect on Economic Growth and the null hypothesis is rejected. The significant Error Correction Terms reveal multidirectional causality between Foreign Direct Investment, Economic Growth and Foreign Aid while there is unidirectional causality between Economic Growth, Foreign Direct Investment, Foreign Aid and Financial Development. A robustness check is then carried out to determine the consistency of the ARDL findings using the Johansen test of co-integration, vector error correction model (VECM) and post estimation tests. The findings reveal consistency in the Error correction terms with (-.91) for ARDL and (-.87) for VECM. The orthogonalized impulse response functions show the effect of permanent and insignificant shocks for the variables. In conclusion to realise significant effect of the Total Factor Productivity components on Economic Growth, the recommended policy actions are to improve governance through public and private sector reforms and reinforce the powers of agencies such as the Ethics and Anti-corruption Commission (EACC), implement structural and economic reforms, lower transaction costs to businesses, and to improve policies for the adoption of technology.
Authors and Affiliations
beatrice Wekhe Misorimaligayo, Christine Nanjala Simiyu
Keywords
Related Articles
- EP ID EP422781
- DOI 10.9790/5933-0906020123.
- Views 177
- Downloads 0
Application of Truncated Distributions to Poverty Analysis among Etsako People of Edo State, Nigeria.
The rational for undertaking this study is to expound on the fact that public and self-employed people who earn income may not be out of poverty. To demonstrate this notion, a truncated poverty distribution analysis is e...
Implication of Malaysia SRI Sukuk framework in Sustainable Community and Economic Development
This study explores the potentials of SRI sukuk in Malaysia. Driven by SRI Sukuk framework by the Security Commission (SC). Focusing on the Community and Economic Development that concentrate on public hospital and medic...
Strategies for the Acceptability of Islamic Micro Finance Institutions in Nigeria
The aim of thisconceptual paper is to highlights about the strategies usefor the acceptability of Islamic microfinance institutions in northern Nigeria.Theobjectives of the paper are to discuss the acceptability and stra...
Impact of Informal Sector on Employment Generation and Poverty Reduction in Chikun Local Government Area of Kaduna State, Nigeria.
Successive governments in Nigeria from independence till date have repeatedly made effort at reducing poverty by establishing series of laudable programmes that could bring succour and smiles to the Nigeria poor masses,...
Evaluation, Modeling and Forecasting Volatility of Daily and Weekly Returns on Nairobi Securities Exchange Using Garch Models
This paper evaluates the forecasting ability of Nairobi Securities Exchange share prices at different time pointsusing Generalized Autoregressive Conditional Heteroskedasticity (GARCH).A five-year period wasused and appr...