Discussion Paper No 285 of 2022 on Firm Level Analysis of Global Value Chain Participation in Kenya

Abstract

Discussion Paper No 285 of 2022 on Global value chain (GVC) participation has been crucial in driving trade earnings and economic transformation for both developed and developing countries. This study focuses on Kenya's GVC participation at the firm level to inform policy decisions. The findings reveal a low GVC participation index of 18.65%, indicating that only 2 out of 10 Kenyan firms are integrated into global value chains. Productivity, firm certification, firm size, research and development spending, and uptake influence GVC participation. Small and medium-sized firms face greater financial constraints, negatively impacting their participation in global value chains compared to larger firms. To enhance firm participation in GVCs, the following recommendations are made: investment in human capital development and technology, raising awareness of international certifications, collaboration between government agencies and business membership organizations, creating credit information infrastructure, and fostering research and development through business hubs, innovation centers, and acceleration programs.