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Kenya’s Development Path and Factor Prices 1964-2000

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  • Bigsten, Arne

    () (Department of Economics, School of Economics and Commercial Law, Göteborg University)

  • Durevall, Dick

    () (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

This study analyses how changes in factor abundance and trade policy have affected factor prices in Kenya since 1964. First there was a period of capital deepening, but this was reversed from 1982. As a result, there has been a shift of production towards the labour-intensive informal sector. The econometric analysis shows that in the long run factor proportions determined relative factor returns; for instance, an increase in the capital-labour ratio raised the wage-capital rental ratio. We did not find any significant impact of changes in goods prices, due to among other things changes in trade policy, on factor returns.

Suggested Citation

  • Bigsten, Arne & Durevall, Dick, 2004. "Kenya’s Development Path and Factor Prices 1964-2000," Working Papers in Economics 142, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0142
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    File URL: http://hdl.handle.net/2077/2773
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    More about this item

    Keywords

    Factor abundance; trade policy; globalisation; factor prices; Kenya;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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