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What determines the long run growth rate in Kenya?

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  • Kumar, Saten
  • Pacheco, Gail

Abstract

This paper examines the determinants of total factor productivity (TFP) in Kenya. We utilized the theoretical insights from the Solow (1956) growth model and its extension by Mankiw, Romer and Weil (1992) and followed Senhadji's (2000) growth accounting procedure. We find that growth in Kenya, until the 1990s was mainly due to factor accumulation. Since then, TFP has made a small contribution to growth. Our findings imply that while variables like overseas development aid, foreign direct investment and progress of financial sector improves TFP, trade openness is the key determinant. Consequently, policy makers should focus on policies that improve trade openness if the long run growth rate is to be raised.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 34 (2012)
Issue (Month): 5 ()
Pages: 705-718

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Handle: RePEc:eee:jpolmo:v:34:y:2012:i:5:p:705-718

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Web page: http://www.elsevier.com/locate/inca/505735

Related research

Keywords: Solow model; Growth accounting; Total factor productivity; Trade openness;

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References

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Cited by:
  1. Cooray, Arusha & Paradiso, Antonio & Truglia, Francesco Giovanni, 2013. "Do countries belonging to the same region suggest the same growth enhancing variables? Evidence from selected South Asian countries," Economic Modelling, Elsevier, vol. 33(C), pages 772-779.
  2. Ben Salha, Ousama & Sebri, Maamar, 2013. "A multivariate analysis of the causal flow between renewable energy consumption and GDP in Tunisia," MPRA Paper 52572, University Library of Munich, Germany.

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