Empirical study of Africa macroeconomic fundamentals mismatch: Impact on economic development in Kenya
Keywords:
GDP, Macroeconomic Fundamentals, Unemployment, Investments, TrendsAbstract
This paper is an analysis of the extent of macroeconomic fundamentals mismatch and the
consequent impact on economic development in Africa, a case of Kenya. A key contribution of
this paper is to show that the macroeconomic variables such as finance, unemployment,
international trade, government fiscal policies, as well as savings and investments by firms and
households interact in the Kenya’s economy; and their total negative impacts owing to
misalignment with key trade sectors contributing the most to economic growth, account for the
country’s weak pecuniary performance; a trend replicable in the larger Africa. The study
employed quantitative research design using a self-administered questionnaire and targeted a
population of 47 managers who are regulators, and commercial bankers, working within
Nairobi, Kenya’s capital. Both secondary and primary sources of data were used in eliciting the
requisite information essential for the research findings. Stratified random sampling was
employed to select the sample data. The Statistical Package for the Social Sciences (SPSS)
version 20.0 was used in data processing and analyses. The findings indicate that the mismatch
of macroeconomic fundamentals in Kenya is significant, with a p = 0.0001, and has far reaching
negative impacts on the country’s economic development. Government fiscal policies, exports,
and finance, had more devastating negative impacts on economic development in Kenya. There is
a general trend indicating that firms and households tended to take advantage of investment
opportunities despite the unfavourable environment.
References
Adams, J., Greig, M. & McQuaid, R.W. (2002). Mismatch in local labor markets in Central Scotland:
The neglected role of demand. Urban Studies, 39 (8), 1399-1416.
African Alliance. (2015). African currencies suffer losses against the US Dollar.
http://sokodirectory.com/2015/08/african-currencies-suffer-losses-against-the-us-dollar/,
accessed 5 October, 2015.
Aiginger, K. & Vogel, J. (2015). Competitiveness: From a Misleading Concept to a Strategy
Supporting Beyond GDP Goals. Competitiveness Review, 25(5), 497-523.
Alam, M.S. (1991). Trade orientation and macroeconomic performance in LDCs: An empirical study.
Economic Development and Cultural Change, University of Chicago Press, 39(4), 839-848.
Allen, A., Cho, J.Y. & Jung, K. (1997). Earnings forecast errors: Comparative evidence from the
Pacific-Basin Capital Markets. Pacific-Basin Finance Journal, 5(7), 115–129.
Banerjee, A.V., & Newman, A.F. (1993). Occupational choice and the process of development.
Journal of Political Economy, 101 (2), 274-298.
Beck, T.,Levine, R. & Loayza, N. (2000). Finance and the sources of growth. Journal of Financial
Economic, 58, 261-300.
Berk, J.B. (1999). A simple approach for deciding when to invest. American Economic Review, 89,
-1326.
Black, E.L. & Carnes, T.A. (2006). Analysts’ forecasts in asian-pacific markets: The relationship
among macroeconomic factors, accounting systems, bias and accuracy. Journal of
International Financial Management and Accounting, 17(3), 208-227.
Bolnick, B.R (2002). Demographic effects on tax ratios in developing countries. Durham, USA:Duke
University.
Bordo, M.D. & Schwartz, A.J. (1979). Clark Warburton: Pioneer of monetarist. Journal of Monetary
Economics, 5(1), 43-65.
Brownbridge, M. & Kirkpatrick, C. (2002). Financial regulation and supervision in developing
countries: An overview of the issues. Development Policy Review, 20 (3), 243-247.
Cline, W. (2001). Macroeconomic influence on trade policy. Institute for International Economics.
Washington, D, C: DuPont Circle, NW.
D’Arcy, M. & Cornell, A. (2016). Devolution and Corruption in Kenya: Everyone’s Turn to Eat?
African Affairs, 115(459), 246-273.
Dore, R. (1994). Incurable unemployment: a progressive disease of modern societies? Occasional
Paper No. 6, Centre for Economic Performance, London School of Economics.
East Africa Exchange (2018). Rwanda powered by Nasdag. http://www.eaafricaexchange.com/pages/regional-trade/rwanda-2, accessed February, 27, 2018.
Forbes, K. (2013). How africa can tackle its tax dodgers. BBC News,
http://www.bbc.com/news/world-africa-23965543, accessed October 29, 2015.
Gray, C.S. (1963). Credit creation for nigeria’s economic development. Nigeria Journal of Economic
and Social Sciences, 5, 3.
Irving, J. (2005). Regional integration of stock exchanges in Eastern and Southern Africa: Progress
and prospects. IMF Working Paper, WP/05/122.
Jalilian, H. & Kirkpatrick, C. (2005). Does financial development contribute to poverty reduction. The
Journal of Development Studies, 4, 636-656.
Jalilian, H., Kirkpatrick, C., & Parker, D. (2003). The Impact of Regulation on Economic Growth in
Developing Countries- A Cross-Country Analysis: Centre on Regulation and Competition
Working Paper No. 54, IDPM, University of Manchester.
Kenya National Bureau of Statistics (KNBS). (2015). Economic survey report highlights.
file:///C:/Users/User/Downloads/economic_survey_2015.pdf, accessed October 25, 2015.
Kenya Vision 2030. (2007). Kenya Vision 2030, Republic of Kenya, Treasury. www.planning.go.ke .
King, R.G., & Levine, R. (1993). Finance and growth: Schumpeter might be right. Quarterly Journal
of Economics, 108, 717-737.
Krugman, P.,& Obstfeld, M. (2009). International Economic: Theory and Policy. Elm St.Publishing
Services, Boston.
Kumar, N.P., Seema, N.,Chand, P.B., & Arti, P. (2007). Export-led Growth Hypothesis: Evidence
from Papua New Guinea and Fiji. Journal of Economic Studies, 34 (4), 341-351.
L’Horty, Y. & Rault, C. (2003). Why is French Equilibrium Unemployment so High? An Estimation
of The WS-PS Model. Journal of Applied Economics, 1, 127-156.
Levine, R. (1997). Financial Development and Economic Growth: Views and Agendas. Journal of
Economic Literature, 35, 688-726.
Mande, V. (1996). A Comparison of U.S. and Japanese Analysts Forecasts of Earnings and Sales.
International Journal of Accounting, 31, 143–160.
Nicholas, O. (2008). Financial depth, savings and economic growth in Kenya. Economic Modelling,
(4), 704-713.
Nyasha, S. & Odhiambo, W.M. (2014). The dynamics of stock market development in Kenya.
Journal of Applied Business Research, 30(1), 73-82.
Otuki, N. (2015). Business leaders join list of Kenya’s most corrupt class. Business Daily, 2074, 6.
Pitelis, C. (1992). Towards neoclassical theory of institutional failure. Journal of Economic Studies,
(1), 14-28.
Ranciere, R., Tornell, A.,& Vamvakidis, A. (2010). Currency mismatch. Economic policy, 597-658.
Santonu, B. & Sushanta, M. (2008). When does growth trickle down to the poor? The India case.
Cambridge Journal of Economics, 32 (3), 461-477.
Schotta, C. (1966). The money supply, exports, and income in an open economy: Mexixo 1939-1963.
Economic Development and Cultural Change, 14, 4.
Schumpeter, J.A. (1911). The theory of economic development. Cambridge MA: Harvard University
Press.
Schwab, K., Smadja, C., Levison, M., Erskine, B. & Gunsbourg, E. (1999). Global competitiveness
report. World Economic Forum, Geneva, Switzerland.
Stanfield, J.R. (1979). The neoclassical synthesis in crisis. International Journal of Social Economics,
(1), 3-17.
Stiglitz, J. (2000). The Contribution of the economics of information to Twentieth century economics.
Quarterly Journal of Economics, 1441-1478.
Tegene, A. (1989). The monetarist explanation of inflation: The experience of six African Countries.
Journal of Economic Studies, 16(1), 5-18.
Voom, D. & Miller, P. (2005). Undereducation and overeducation in the Australian labor market. The
Economic Record, 81 (255), 22-33.
Wells, D.R. & Gootzeit, M.J. (1984). Austrians vs. Monetarists on money and credit. Studies in
Economic and Finance, 18(2), 81-96.
Yamane, T. (1967). Statistics: An introductory analysis (2nd ed.). NY: Harper and Row.
Published
How to Cite
Issue
Section
Copyright (c) 2018 San Lio
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
