Effect of Electronic Commerce on Output and Total Factor Productivity in Kenya
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Date
2020
Authors
Kithinji, Elvis Mwenda
Onono, Perez A.
Journal Title
Journal ISSN
Volume Title
Publisher
KSP Library
Abstract
Kenya seeks to transform into a middle-income country by 2030 with target
annual growth rates of 10 percent. However, this has not been realized since growth rates
are under 10 percent while 36 percent of the population lives below the poverty line.
Various studies interpret this as an underperformance. However, this study held the view
that the economic growth witnessed in the years 2007 to 2018pointed to a resilient economy
characterized by average steady growth rates of 5.4 percent despite the deterioration of the
global economic outlook. This resilience coincided with the adoption of e-commerce,
increased output in absolute values and emphasis of Information and Communication
Technology as a key industry under the economic pillar of the Kenya Vision 2030. The
period also saw the emergence of mobile payment gateways, which is a key enabler for E-
commerce among others. E-commerce activities increase efficiency and ease of doing
business by reducing costs and barriers of operation, which are important for achieving
economic growth in transition countries such as Kenya. The main objective of the study was
to investigate the effect of e-commerce on output and total factor productivity. The study
developed a framework following the neoclassical and endogenous growth theories. The
study used quarterly time-series data from the period 2007 to 2018 and applied Ordinary
Least Squares regression models. The results showed that e-commerce had a positive effect
on output. The effect of e-commerce on Total Factor Productivity was positive when
considering the value of mobile payments while that of card payments was negative. The
results suggest that continued investments towards e-commerce in terms of capital and
mobile payments technology will be important for Kenya to sustain output growth and
productivity increase.
Description
A research article published in Journal of Economics and Political Economy
Keywords
E-commerce, ICT, Output, Mobile payments, Total factor productivity
Citation
KITHINJI, E., & ONONO, P. (2020). Effect of electronic commerce on output and total factor productivity in Kenya. Journal Of Economics And Political Economy, 7(2), 101-130. doi:http://dx.doi.org/10.1453/jepe.v7i2.2064