Institute for Development Studies, University of Nairobi

The purpose of this paper is to discuss the role of capital investment in growth and development policy, with particular reference to Kenya. The conclusion reached, through the application of regression and correlation analysis, is that (a) capital investment is a necessary but insufficient condition for the growth of the economy; (b) capital investment has little or no correlation with growth in some industrial sectors; and (c) capital investment contributes significantly in the industries which use machines and equipments. The policy for growth should distinguish between these economic sectors.