Discussion Paper No. 22 of 2002 on Analysis of Kenya's Export Performance: An Empirical Evaluation

Abstract

With globalisation, export-led growth strategy has become a major focus for many countries including Kenya. Although there have been efforts towards diversification of the export sector, Kenya’s exports are still dominated by primary agricultural products. This paper broadly examines the factors that have influenced Kenya’s export volumes by disaggregating total exports of goods and services into three categories: traditional agricultural exports (tea and coffee) and ‘other exports of goods and services’. For each of the three categories of exports, an empirical model is specified along the standard trade models that incorporate real exchange rate (proxy for relative prices) and real foreign income (of major trading partners) as explanatory variables. An additional variable (investment as a proportion of GDP) is included as a proxy to capture the supply constraints...