Trade Openness, Export Quality and Economic Growth Nexus in Kenya

Abstract

Economic growth is a major concern for developing and underdeveloped countries. High economic growth creates opportunities for poverty eradication, employment creation, investment, and wealth creation. While measures to enhance cross-border trade are regarded as effective in enabling economic growth, studies have yielded mixed results on their impacts. Kenya's trade openness level has declined, besides the country implementing various policies to strengthen cross-border trade. Trade openness declined from 57 percent to 27 percent between 1990 and 2020, underscoring the need to understand its effects on Kenya's economy. The general objective of this research was to analyze the impact of trade openness on Kenya's economic growth, and the specific objectives were to determine the impact of trade openness on the economic growth of Kenya and to establish the effects of the quality of exported products on economic growth in Kenya. Ordinary least squares estimation technique was used to determine the relationship among variables. The study established that trade openness does not lead to increased economic growth in Kenya. The research further found that an increase in the quality of exports increases economic growth in Kenya. The study concluded that Kenya should enhance the quality of its exports and diversify them to improve economic growth. Further, the paper observed that Kenya should lower the cost of doing business in the country to make her industries and products competitive, which can help ensure trade openness positively impacts the country's economy. It was observed that attempts to restrict trade openness are likely to lead Kenya to experience similar measures from its trading partners.