Determinants of foreign exchange inflows to Kenya; 1980-2014

Abstract

Foreign aid is a post-world war II phenomenon that came about when western states had the notion that poor countries were in a low income equilibrium trap and needed to supplement their low income savings with foreign savings in the form of official development assistance (ODA) and foreign direct investments (FDI). All this was done to promote capital formation and increase economic growth. Aid also had other objectives which included poverty alleviation, bridging the gender gap and promoting good governance. The main objective of the study was to understand the determinants of foreign resources to Kenya both bilateral and multilateral to government and civil societies. The specific objectives of the study were; to identify the determinants of trade flows to Kenya; to examine the determinants of foreign direct flows to Kenya; and to investigate the determinants of official development assistance to Kenya. The study used a research design that is descriptive in nature. The research reviewed recent literature on the determinants of foreign aid allocation to Kenya both bilateral and multilateral aid. Secondary data was collected from World Bank development indicators, surveys conducted by the Kenya government, strategic plans, financial and narrative reports, publications, policy documents and other relevant documents.