Economic effects of horticulture on income and investment in Kenya

Abstract

This research paper analyses the economic effects of horticulture on income and investment in Kenya over the period 1970-2004. The variables used are government expenditures on horticulture, which is divided into Cut-flower production expenditure, vegetable production expenditure and fruit production expenditures. These are used in this study as the independent variables while the dependent variables are GDP(Income) and the investment, which is both public and private investment aggregated together. The main objective of the study is to analyze the effects of horticulture on income and investments in Kenya. The specific objectives of the paper are to assess the investment and income growth due to horticultural support and to make policy recommendations on the way forward for horticultural sector in Kenya. The results show a great variation in horticulture expenditure as measured by cut flower production expenditure, vegetable production expenditure and fruit production expenditure. The explanatory variables (investment and income) are important in explaining the changes in the horticultural production expenditure since they are positively related to the horticulture investment and the income (GDP) are thus better explained by horticultural production expenditures of a country. The study recommends that the ministry of Agriculture should increase the budget in real terms and the bulk of expenditure must be channeled towards the horticulture production so that the country can be able to earn foreign exchange. Greater finances and horticultural resources (including Cut flower production, vegetable production and fruit production) should be directed to areas where the horticulture performs well to improve the potential of the productive services