Market Liberalization in Emerging Economies: Changing Business Practices

This chapter demonstrates how economic reform in Kenya has been shaped by the influence of politically powerful vested interests. The reform can, therefore, be largely explained in a political sense. In the wisdom of urban bias that underlines Structural Adjustment Programs (SAP), it was observed that the poor performance of Kenya’s economy was due to political motivations, yet politics was a neglected dimension in the reform process right from the beginning of SAPs. Politics should have been better understood and better managed in reform in order to improve reform outcomes. Using the urban bias theory, the chapter provides a useful explanation as to why African governments had formulated and implemented policies that were antirural, thereby undermining agriculture—the most important sector in their economies. The specific objectives of the chapter are to (1) understand the key features of a state-controlled economy; (2) appreciate how liberalization of Kenya’s economy changed business practices; (3) appreciate the value of politics and political interest groups in the economy; (4) understand the emerging economy of Kenya; and (5) appreciate the critical factors affecting the emerging markets of Kenya.