The Impact Of Inward FDI On Export Growth In Kenya(1980-2017)

Many authors and researchers have studied and analysed the impacts of inward Foreign Direct Investment(FDI)on the export performance and growth of a host country.A large number of them have concluded that inward FDI has a positive impact and is statistically significant in promoting a host country?s export growth.The main objective of this paper is to investigate whether inward FDI has a significant impact on export growth in Kenya.Using annual secondary time-series data from 1980-2017 we investigate the role of key macroeconomic variables(Exports,FDI,GDP,Gross Domestic Savings,Trade Openness,Exchange Rate,Inflation,Industry Value Added and Gross Fixed Capital Formation)using Ordinary Least Squares(OLS)method.Econometric results suggest that foreign investment has statistically no significant impact on Kenya's export growth and the coefficient of FDI variable,in fact,has a negative sign.The results,therefore,indicate that in Kenya,FDI has a negative but insignificant impact on the country?s export growth.These results are very interesting because in previous studies FDI is often seen as an engine for exports.In the case of Kenya,this could be due to the fact that a lot of inward FDI is geared towards construction,telecommunications,financial and insurance sectors.The main exports in Kenya are agricultural exports(tea,coffee,flowers and other horticultural products)and it appears that FDI stock and liabilities in this sector are minimal.FDI inflow into Kenya may not have been geared towards the export sectors for the period of study.