Protection Across Steel and Steel Related Industries in Kenya

Abstract

This research examines the extent to which the impact of the structure of protection on relative resource pulls, manifested as defensive over-investment among the wire products firms. This occurred in response to the cancelling or offsetting effects inherent in the protectionist regime. A package of incentives for wire products are.offset by the incentives for the wire drawing firms. This inconsistency in the design and implementation of the package of industrial incentives is responsible for unnecessary capacity building which is a waste form Kenya. The structure of protection by and large is an outcome of the manipulation of the institutions for protection by manufacturers and the degree of inefficiency in the performance and poor coordination of the institutions. Failure to control monopolistic practices, redundant investments and guide this vital industry in desired direction is a reflection of the weaknesses of the institutional. framework. This paper assesses the justifications for manufacturers I demands for further increase in nominal protection and presents a relevant criteria for assessing such demands. Lack of a clear vision of a rational criteria for tariff restructuring and rationalization will continue to provide incentives incentives for further lopsided development of this vital industry.