Evidence shows that leveraging foreign direct investment (FDI) could lead to industrial growth by providing benefits such as technology spillovers, human capital development, improved international trade integration, and a more competitive business environment. These benefits collectively contribute to higher economic growth, which is crucial for reducing poverty in developing countries and promoting industrialization. This study evaluates the impact of FDI on industrialization in four key sectors in Kenya: mining, manufacturing, electricity, oil and gas, and construction, covering the period from 2007 to 2022. The study used three models using a one-step Generalized Method of Moments (GMM) to analyze the effects of FDI on sector-specific industrial value added relative to their contribution in Gross Domestic Product (GDP). Further, the study estimated a seemingly unrelated regression (SUR) to analyze the sector specific analysis effect of FDI and Domestic Direct Investments (DDI) on the sector’s value added contribution to GDP for the four industrial sectors. The study found that FDI inflows have a minimal impact on overall industrialization. The sector-specific analysis shows that mining and quarrying benefit from both FDI and DDI, with foreign investments being crucial due to the capital-intensive nature of the sector. In manufacturing, FDI, especially greenfield investments, significantly enhances production capabilities through new technologies, while brownfield investments need regulatory reforms to improve their long-term benefits. The electricity, oil and gas sectors benefit from greenfield FDI and domestic investments, with greenfield projects boosting productivity and local investments. Brownfield FDI currently has a negative effect, but holds the potential for long-term benefits. The construction sector benefits from both FDI and DDI, but the domestic investment is more pronounced due to its capital-intensive nature. The sector also significantly benefits from both brownfield and greenfield FDI. T