Browsing by Author "Kioko, Josphat Mutuku"

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    Portfolio and Foreign Direct Investments Effects on Youth Unemployment in Kenya
    (Kenyatta University, 2025-11) Kioko, Josphat Mutuku
    Foreign firms have established themselves in financial services, insurance services, educational institutions, communication technology, trade and manufacturing in Kenya, bringing in much needed foreign direct investments. Portfolio investors in Kenya have invested in mobile money transfers, agricultural processing, banking sector, health care services, information communication technology, renewable and non-renewable energy, extractives, retail trade, transport infrastructure and hospitality industry. Meanwhile, youth unemployment rates rose from 6.676 in 1993 reaching 12.012 in 2023, see attached appendix A4 data, indicating growing economic challenges despite investment inflows. Despite the rise in Kenya’s foreign direct investments from 2.53% of Gross Domestic Product in the year 1993 reaching 0.67% of Gross Domestic Product in the year 2023 and portfolio investments from 0.32% of Gross Domestic Product in the year 1993 reaching 0.597% of Gross Domestic Product in the year 2023 see attached appendix A4 data, empirical understanding of relationship between youth unemployment and these forms of investments has been elusive due to mixed results. This study, therefore, aims to examine the effect in Kenya of both foreign direct investment and portfolio investment on the youth unemployment. The two specific objectives are (i) to assess the effects of foreign direct investments on youth unemployment rate in Kenya; (ii) to establish effects of portfolio investments on youth unemployment rate in Kenya. Investments have not been prioritized to affect the level of youth unemployment; this informs this research work. The Keynesian theory of unemployment anchors the study. This research is non-experimental as the time series data is sourced from secondary databases such as International Monetary Fund (IMF) and World Bank Development Indicators(WDI) for 1993 to 2023 period. Several diagnostics tests such as unit root test, cointegration bound test, heteroskedasticity test, test for normality, autocorrelation test, model stability test and omitted variable test were done and the model passed all diagnostics tests. The effects of foreign direct investments on youth unemployment in Kenya and the effects of portfolio investments on youth unemployment in Kenya were assessed through the use of ARDL model. Findings of the research, foreign direct investments are significant in the short run and insignificant in the long run. Portfolio investments are insignificant in the short run and long run. Conclusion of study, foreign direct investments create new demand in the short run which creates new job opportunities for the youth while in the long run it does not create employment opportunities due to mergers and acquisitions of entities. Portfolio investments don’t create employment opportunities for the youth in the short run and long run. The study recommends that the ministry of investment, trade and industry, the incoming foreign direct investments should be directed towards youth employment absorbing sectors in agro processing, construction, manufacturing and horticulture. Foreign direct investments can be used to expand sectors with low youth unemployment and create new sectors that can absorb youth. Portfolio investments cannot be relied on employment creation for the youth.