Browsing by Author "Ronoh, James Kibet"

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    Foreign Capital Flows and Economic Growth in Kenya
    (Kenyatta University, 2025-11) Ronoh, James Kibet
    Kenya's strong economic performance among low- and middle-income countries highlights its growth potential, yet economic fluctuations expose structural vulnerabilities that must be addressed for sustained growth. This research examined the effect of foreign capital inflows—portfolio debt (bonds), portfolio equity, foreign direct investment (FDI), diaspora remittances, and foreign aid—on Kenya's economic development. By analyzing these financial contributions, the research sought to give a detailed comprehension of their role in shaping the country's economic trajectory. The research is grounded in three key economic models: the Solow-Swan Growth Model, which stresses capital accumulation and technological progress; Endogenous Growth Theory, which highlights innovation, human capital, and policy as drivers of expansion; and Dependency Theory, which critiques financial dependence and structural imbalances between developed and developing nations. These frameworks will guide the analysis of foreign capital inflows. Using an explanatory cross-sectional research design, the research relied on secondary data from the CBK, KNBS, KIPPRA, and the Ministry of Finance. The 2013–2023 data set enabled an analysis of long-term trends in capital flows and economic performance. Quantitative methods was employed, utilizing SPSS version 28.0 for statistical analysis. Descriptive statistics summarized key trends, while multiple linear regression assessed the connection between foreign capital inflows and economic growth. Diagnostic tests ensured data reliability, including normality, multicollinearity, autocorrelation, and heteroscedasticity. Ethical considerations, including responsible data use and proper source recognition, was strictly observed. The research found that foreign portfolio equity, foreign direct investment and remittances when analyzed individually, each had a statistically significant bearing on the economic growth in Kenya with p-values of 0.001, 0.004 and 0.000 respectively. As a result, these hypotheses were rejected at 5% significance level. Foreign portfolio debt and foreign aid each had a statistically insignificant bearing on the economic growth in Kenya with p-values of 0.202 and 0.334 respectively. As a result, these hypotheses were not rejected at 5% significance level. The report recommended that Kenya government should seek to improve the investments climate and business environment in the country to attract mode FDI which can be able to have a significant role on economic growth. Having policies that encourage FDI and marketing the country as a desirable investment destination would be a good starting point. Equally, it recommends that the government should devised a foreign policy that places great importance on the diaspora. Additionally, this article advocates for the Kenyan government to implement a holistic strategy to promote foreign investment, acknowledging its crucial role in stimulating economic growth and development. In addition, this research recommends that the Kenyan government should use an integrated approach to encourage foreign portfolio equity, as it is important in spurring economic growth and development. The government must also implement a number of strategic programs to streamline and stream the investment process. furthermore, the study suggests that the government must come up with a foreign policy that puts a lot of emphasis upon the diaspora. This is inherent component of the policy that aims at tapping the diverse skills, wisdom, expertise, and resources of Kenyans living abroad that they can easily be incorporated in development agenda of the country.