Public Agricultural Research and Development Expenditures and Economic Growth in Kenya
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Date
2014-03-07
Authors
Maluku, Stephen Mwongela
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Abstract
Research and Development (R&D) plays a fundamental role in economic
growth in that it provides impetus for new knowledge and technologies which
contributes to growth of the economy. Existing literature identifies knowledge
expansion prompted by expenditures on R&D as a key propellant of economic
growth. The literature provides evidence that R&D investments translates to
discoveries which transforms resources into products, processes and services
and thus leads to growth of the economy. Inspired by the desire to grow the
economy, the public and the private sector in Kenya has overtime allocated
resources to finance public agricultural R&D. In the 1980s, the expenditures
varied significantly ranging from between 2.3 and 3.5 billion shillings which
improved in the 1990s to range at between 3.5 and 4.1 billion shillings. In the
2000s, agricultural R&D expenditures fluctuated at between 3.9 and 4.4
billion shillings. The study sought to determine whether the expenditures on
public agricultural R&D impact on GDP growth in Kenya. The study's
guiding question was, does investments on public agricultural R&D impact on
GDP growth in Kenya? The study used a causal research design and published
annual data on public agricultural R&D intensity and GDP growth for 31 years
between 1980 and 2010. Diagnostic unit root tests, co integration tests, Error
Correction Models (ECMs) estimation and an advanced Granger causality test
within an ECM were conducted in an effort to establish whether public
expenditures on agricultural R&D impact on GDP growth in Kenya. The co
integration test results and the ECMs estimation results indicated that public
agricultural R&D intensity and GDP growth have a long run relationship. A
Wald F test on the ECMs showed lack of short run causal effects between the
variables. The estimated coefficients in both ECMs established a long run
unidirectional causality in that public agricultural R&D intensity causes GDP
growth and not vice versa.
Description
Department of Econometrics and Statistics, 2013