Discussion Paper No. 277 of 2021 on The Interplay Between Intellectual Property Rights and Total Factor Productivity in Kenya

Abstract

Kenya is an innovation-driven country powered by knowledge, creativity, and technology, each of which is fundamentally supported by intellectual property (IP) and intellectual property rights (IPRs) protections. This study uses the World Bank's 2018 Enterprise Development Survey data for Kenya to examine the effect of intellectual property rights on total factor productivity in the manufacturing sector, whose contribution to GDP has been decreasing. It looks at total factor productivity within Kenya’s manufacturing sub-sectors and its determinants. Growth accounting framework provides the estimates for total factor productivity for manufacturing firms in Kenya using a balanced panel data for the year 2007, 2013, and 2018. A second model explores the determinants of total factor productivity with key focus being on intellectual property rights. The results show that the key determinants of total factor productivity were intellectual property rights, research and development, training, quality certification, foreign direct investment, and direct exports. These factors had statistically significant effect on total factor productivity. The study recommends an increase in the uptake of IPR through sensitization and public awareness to protect innovations, combat illicit trade and increase total factor productivity in the manufacturing sector of Kenya