The Micro and Macroeconomic Determinants of Private Investment in the Manufacturing Sector in Kenya

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Kenya continues to record low levels of growth in private investment. This is despite the new paradigm that recognizes market mechanism and private enterprise as more efficient in generating the economic dynamism that leads to growth. This study set out to find the macro and micro economic factors that affect investment particularly in the manufacturing sector in Kenya. Econometric techniques of time series and also a survey were employed to analyze this phenomenon. High on the list of the macroeconomic factors negatively determining private investment is the high and unstable interest rates, increasing public debt, dilapidated infrastructure, insufficient expenditure on education development, low levels of credit to the private sector, the low level of GOP and generally, a harsh macroeconomic environment. These factors not only affect the manufacturers but also the Agriculture and the Service sectors. On the micro level, the macro factors also playa role coupled with other numerous socio-political and economic factors e.g. insecurity, corruption and contraband trade. If Kenya is to rid herself from the current economic quagmire and achieve her stated goal of becoming a Newly Industrialized Country (NIC) by the year 2020, then it needs to borrow a leaf from the "Asian Tigers" and tackle these issues urgently.



Macroeconomic Determinants, Private Investment