How Does Agricultural Sector Dynamics Influence Economic Growth in Kenya? An Empirical Investigation of Key Drivers

Öz

Kenya's agricultural sector, renowned for its tea and horticultural exports, is pivotal to the nation's economic development. This study investigates the effects of agricultural sector variables on Kenya's economic growth from 1995 to 2021, with a particular focus on agricultural export-led growth. Findings challenge the conventional support for agricultural exports as a primary driver of economic growth in Kenya, as exports show a positive but statistically insignificant effect on GDP per capita under the FMOLS and CCR models. This weak evidence for export-led growth suggests that potential gains from exports may depend on broader factors such as value addition, export diversification, and better access to international markets. Additionally, agricultural imports had a positive but insignificant impact on economic growth, indicating potential contributions through access to vital inputs and technology. In contrast, agricultural employment exhibited a significant negative relationship with growth, implying an economic shift from agriculture toward industrial and service sectors, which can foster higher productivity. Government spending on agriculture, however, negatively impacted growth, indicating inefficiencies in resource allocation. The study recommends that Kenya enhance export competitiveness, improve government spending efficiency, and focus on value addition in agriculture. Strategic interventions to address structural inefficiencies, support sectoral transformation, and elevate productivity are essential to harness the agricultural sector’s potential for sustained economic growth.

Anahtar Kelimeler

• Kenya
• Agriculture
• Economic Growth
• Exports
• CCR
• FMOLS

Kaynakça

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