The relationship between informal sector size and economic growth in Kenya
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Date
2014
Authors
Muthyoi, Alexander
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Over the years, there has been an ongoing debate in the literature on the
expansion of informal sector in Less Developed Countries. In Kenya, just like
other less developed countries, informal sector commonly known as Jua Kali, has
been playing a significant role in job creation. The sector also plays a key role in
contribution to the country's Gross Domestic Product, provision of certain goods
at cheap prices hence leading to household savings. The sector also provides
competition to formal sector leading to cheap prices and innovativeness. In 1998,
the informal sector contributed 18.4% of the country's GDP. The purpose of the
research was to explore the contribution of Informal Sector size in economic
growth in Kenya from 1980 to 2010. The scope of the study covered the period
from when the government of Kenya officially came up with comprehensive
policy framework on informal sector. Specifically, this study evaluated the
relationship between the real Gross Domestic Product per capita growth and
growth of informal sector employment in the country. To achieve this objective,
the study used time series data obtained from government of Kenya official
documents. The study showed that there is a relationship between the country's
informal sector size and economic growth. The findings of the study would assist
in policy formulation on the growth of the informal sector size.
Description
Department of Econometrics and Statistics, 62p. 2014