Effects of Kenya-China Bilateral Relations on Kenya’s Economic Growth
Journal Title: Journal of Economics, Finance and Management Studies - Year 2024, Vol 7, Issue 08
Abstract
The essence of bilateral relations to any nation is to offer the country the chance to access resources that are not locally available. China has emerged as a major global power marking an unparalleled presence in the international arena with significant influence in Africa. In Kenya, Chinese imports, Foreign Direct Investments and debts have grown tremendously over the years. Whereas Kenya has experienced some economic growth in those years, it is not yet clear whether the bilateral relationship with China is the cause of this growth. There have been mixed results on the studies done on the implication of Kenya - China bilateral relations on Kenya’s Economic Growth, therefore, calling for further research. The general objective of the study was to determine the impact of the bilateral relations between Kenya and China on Kenya’s Economic Growth, while the specific objectives were to determine the effect of the Chinese imports from Kenya, Kenya’s exports to China, Kenya’s debt from China and foreign direct investment inflows from China on the Kenya’s Economic Growth. This was made possible through the analysis of 32 years’ data ranging from 1990 to 2021 on an annual time series basis. The study employed the neo-classical model of Solow-Swan Theory, supplemented by the Dependency Theory. The study utilized an explanatory research design. The study findings showed that Kenya's economic growth is significantly and negatively influenced by foreign direct investment. Debt had an insignificant effect on Economic growth, Imports had a significant effect on the economic growth and Exports were found to have an insignificant negative effect on economic growth. The study concluded that foreign direct investment has a negative and significant effect on the economic growth, while imports have a significant and positive effect on economic growth. Debt had an insignificant and positive effect on the economic growth, while exports had an insignificant and negative effect on economic growth. The research therefore recommends that Kenya is an import-led growth economy. Therefore, imports from China, especially for capital goods that are used in critical sectors such as industries, infrastructure, and agriculture should be encouraged. By importing from China, a technologically developed country, Kenya benefits by transfer of technology, knowledge and innovations. It is also recommended that the foreign direct investment from China to Kenya need to be monitored and limited. New policies need to be put in place to protect “dumping” and “crowding out effect” as well as protect local industries and artisans working in the informal sector.
Authors and Affiliations
Patrick Murimi , Elvis Kiano , Richard K. Siele,
Keywords
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- EP ID EP742348
- DOI 10.47191/jefms/v7-i8-17
- Views 22
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