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The impact of trade openness on growth: The case of Kenya

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  • Musila, Jacob W.
  • Yiheyis, Zelealem

Abstract

This paper investigates the effects of trade openness on the level of investment and the rate of economic growth in Kenya using annual time series data. The aggregate trade openness and trade-policy induced openness are evaluated. Controlling for a number of factors, aggregate trade openness is found to have positively affected the level of investment and the rate of economic growth, although the effect on the latter is statistically insignificant. On the other hand, we find trade-policy induced openness to have negatively and significantly affected investment and the rate of economic growth. Granger Causality tests suggest that a change in trade openness influences the long-term rate of economic growth through the interaction with physical capital growth in the case of Kenya.

Suggested Citation

  • Musila, Jacob W. & Yiheyis, Zelealem, 2015. "The impact of trade openness on growth: The case of Kenya," Journal of Policy Modeling, Elsevier, vol. 37(2), pages 342-354.
    • Handle: RePEc:eee:jpolmo:v:37:y:2015:i:2:p:342-354
    DOI: 10.1016/j.jpolmod.2014.12.001
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    More about this item

    Keywords

    Economic growth; Trade openness; Kenya;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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