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Import Demand Elasticities and Stability during Trade Liberalization: A Case Study of Kenya

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  • Mwega, Francis M

Abstract

This paper utilizes an error correction model to estimate demand elasticities for aggregate imports and components in Kenya over 1964-91. The results show the short-run relative price and real income aggregate import demand elasticities to be non-significant or weakly significant. On the other hand, aggregate imports were strongly responsive to lagged forex reserves and forex earnings. The non-significant or weakly significant relative price and real income elasticities suggest that devaluation and stabilization policies pursued in the past did not effectively assist trade liberalization efforts, at least at the rate they were implemented. More generally, they suggest that policies that directly increase export earnings and access to external capital inflows are likely to have a larger impact on import volumes than those that concentrate exclusively on aggregate demand and exchange rate management. Copyright 1993 by Oxford University Press.

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  • Mwega, Francis M, 1993. "Import Demand Elasticities and Stability during Trade Liberalization: A Case Study of Kenya," Journal of African Economies, Centre for the Study of African Economies, vol. 2(3), pages 381-416, December.
    • Handle: RePEc:oup:jafrec:v:2:y:1993:i:3:p:381-416
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    Cited by:

    1. Khurram Ashfaq Baluch & Syed Kalim Hyder Bukhari, 2012. "Price and Income Elasticity of Imports: The Case of Pakistan," Working Papers id:4899, eSocialSciences.
    2. Ranjini L. Thaver & E. M. Ekanayake, 2010. "The Impact Of Apartheid And International Sanctions On South Africa'S Import Demand Function: An Empirical Analysis," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 4(4), pages 11-22.
    3. AYODOTUN, Ayorinde & FARAYIBI, Adesoji, 2016. "Modelling the Determinants of Import Demand in Sub-Sahara Africa," MPRA Paper 73225, University Library of Munich, Germany.
    4. Harvey Simon & Sedegah Kordzo, 2011. "Import Demand in Ghana:Structure, Behaviour and Stability," Working Papers 233, African Economic Research Consortium, Research Department.
    5. Léonard Nkouka Safoulanitou & Mathias Marie Adrien Ndinga, 2010. "An Empirical Analysis of the Determinants of Food Imports in Congo," Working Papers 195, African Economic Research Consortium, Research Department.
    6. AYODOTUN, Ayorinde & FARAYIBI, Adesoji, 2016. "An Empirical Analysis of the Structure of Imports in Sub-Sahara Africa," MPRA Paper 73278, University Library of Munich, Germany.
    7. S. Ssekabira Ntege & C. Harmse, 2003. "Are Prices Sticky Downwards? The Effect Of Trade Liberalisation On South Africa'S Wine Industry," South African Journal of Economics, Economic Society of South Africa, vol. 71(4), pages 729-761, December.
    8. Arize, Augustine C. & Nippani, Srinivas, 2010. "Import demand behavior in Africa: Some new evidence," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(3), pages 254-263, August.

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