Top PDF Adjustment and private investment in Kenya

Adjustment and private investment in Kenya

Adjustment and private investment in Kenya

Though real depreciation is found to have a Econometric estimation of the investment direct negative impact on investment, the authors model with Kenyan data for 1968-88 suggests use[r]

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Impact of Government Expenditure on Private Investment in Kenya

Impact of Government Expenditure on Private Investment in Kenya

Sessional Paper No 1 of 1986 on Economic Management for Renewed Growth contained the Structural Adjustment Programmes suggested by World Bank and International Monetary Fund (Republic of Kenya, 1986). The central thrust of the policies was to rely on market forces to mobilize resources for economic growth and development, with the role of government increasingly confined to providing an effective regulatory framework and essential public infrastructure and social services. The changes in allocation of budget resources were implemented by government. The government spent proportionately more on immediately productive services. It also increased its outlay on infrastructure to promote smaller towns and rural centers to improve overhead facilities, including roads, power and water supplies. In agriculture, more money was channeled to research, extension services including tea and coffee planting programmes and other projects to raise agricultural production. The government spending on polytechnics and credit programmes to assist small scale industries in both rural and urban areas were also increased. These expenditures received the first allocation in the budgets that followed (Republic of Kenya, 1986). As a result, the share of formal education, health and other basic needs expenditure was reduced (Republic of Kenya, 1986).
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IMPACT OF ECONOMIC GROWTH ON PRIVATE INVESTMENT IN KENYA

IMPACT OF ECONOMIC GROWTH ON PRIVATE INVESTMENT IN KENYA

As the variables are expressed in logarithmic form, the coefficients are interpreted as elasticities. The error-correction term (ecm) is negative as expected, and significant (high absolute t-statistic). The strong significance reinforces the argument of the model variables being cointegrated. The adjustment of the model to the previous year‟s disequilibrium is 68.7%. In the short-run, gross domestic product, central government infrastructural investment and import capacity rates positively influence private investments. Credit available, parastatal sector investment, central government non- infrastructural investment and political instability negatively influence private investments in Kenya.
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Establishing the Relationship between Public and Private Investment in Kenya

Establishing the Relationship between Public and Private Investment in Kenya

This study undertakes to establish the relationship that exists between public investment and private investment in Kenya during the period of 1971-2011. The study adopts the flexible accelerator model using the time series data for the period in consideration. Variables in the model are real GDP, inflation, interest rate, domestic credit, exchange rate, exports and external debt. The data for these variables was collected from various sources including The Central Bank of Kenya, Economic Surveys, Statistical Abstract and International Financial statistics. Using econometric techniques, the empirical results show domestic credit, real gross domestic product and exports have positive impact on private investment both in the long run and short run while exchange rate, external debt had both short run and long run negative impact on private investment. This study recommend the use of efficient and modern technologies in the manufacturing and agricultural sector to increase their productivity, more domestic credit to the private sector, debt relief among other policies are suggested to boost private investment in Kenya.
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THE INFLUENCE OF IMPORT CAPACITY ON PRIVATE INVESTMENT IN KENYA

THE INFLUENCE OF IMPORT CAPACITY ON PRIVATE INVESTMENT IN KENYA

As the variables are expressed in logarithmic form, the coefficients are interpreted as elasticities. The error-correction term (ecm) is negative as expected, and significant (high absolute t-statistic). The strong significance reinforces the argument of the model variables being cointegrated. The adjustment of the model to the previous year‟s disequilibrium is 68.7%. In the short-run, gross domestic product, central government infrastructural investment and import capacity rates positively influence private investments. Credit available, parastatal sector investment, central government non- infrastructural investment and political instability negatively influence private investments in Kenya.
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The Impact of Domestic Public Debt on Private Investment in Kenya

The Impact of Domestic Public Debt on Private Investment in Kenya

Kenya’s Public domestic debt reached a level of Ksh 444.7 billion in March 2008. This paper examined the impact of public domestic debt on private investment levels in Kenya over the period 1967-2007. An investment function with four independent variables, namely public domestic debt, GDP, interest rate and public investment was estimated by analyzing the unit root test and co-integration test. The unit root test revealed that all variables under investigation are integrated of order one and are co-integrated in the long-run. The results indicated that high levels of domestic borrowing have negatively impacted on private investment. The results also showed that the impact of public investment on private investment was not as significant as public domestic debt, GDP and interest rate variable suggesting that public investment has not been complementary on private investment. Interest rates have negatively impacted on private investments, while with regard to GDP, economic growth has induced more private investments. The findings of this paper call for designing appropriate policies that deal with the ever rising domestic public debt and the sale of domestic debt to donors under the Paris Club umbrella. The results have important implications for fiscal management in the context of the country’s crying need to generate faster employment growth, meet the Millennium Development Goals and attain the Vision 2030 goals. Research results are also of significant value to the academia in helping them design other longitudinal studies. Keywords: Kenya, GDP, domestic debt, private investment
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IMPACT OF PUBLIC INFRASTRUCTURAL INVESTMENT ON PRIVATE INVESTMENT IN KENYA

IMPACT OF PUBLIC INFRASTRUCTURAL INVESTMENT ON PRIVATE INVESTMENT IN KENYA

As the variables are expressed in logarithmic form, the coefficients are interpreted as elasticities. The error-correction term (ecm) is negative as expected, and significant (high absolute t-statistic). The strong significance reinforces the argument of the model variables being cointegrated. The adjustment of the model to the previous year‟s disequilibrium is 68.7%. In the short-run, gross domestic product, central government infrastructural investment and import capacity rates positively influence private investments. Credit available, parastatal sector investment, central government non- infrastructural investment and political instability negatively influence private investments in Kenya.
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Private investment and macroeconomic adjustment : an overview

Private investment and macroeconomic adjustment : an overview

This paper reviews current investment theories, recent models linking macroeconomic policies and private investment, and the effect of uncertainty and credibility on irreversible investm[r]

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Structural adjustment in the 1980s : Kenya

Structural adjustment in the 1980s : Kenya

Other reform measures include the introduction of cash reserve ratios (6 percent since 1986), and the imposition of 20 and 24 percent liquidity ratios on commercial banks and near bank f[r]

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Private investment under macroeconomic adjustment in Morocco

Private investment under macroeconomic adjustment in Morocco

The framework for private investment combines neoclassical investment determinants (the user cost of capital and the marginal product of capital) with borrowing constraints (credit to th[r]

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Financing Cost and Private Investment in Ghana

Financing Cost and Private Investment in Ghana

Following the limitations of the naïve accelerator theory, the flexible accelerator theory emerged. The naïve accelerator theory was modified to what became known as flexible accelerator principle of investment. A more general form of the accelerator model is the flexible accelerator model. The basic notion behind this model is that the larger the gap between the existing capital stock and the desired capital stock, the greater a firm’s rate of investment. Unlike the naïve accelerator theory, the flexible accelerator theory postulates that firms do not instantaneously adjust their existing capital stock to the desired capital stock because of uncertainties and various adjustment costs. Rather, what happens is that once a ‘shock’ to output occurs, firms gradually adjust their level of capital with the aim of re-establishing the optimal capital-output ratio. The theory therefore asserts that the gap between the existing capital stock and desired capital stock determines investment. The larger this gap, the greater the firm’s rate of investment as firms attempt to close the gap in each period. Consequently, the net investment equation could be formulated as : I=δ (K*- K-1), where I represents net investment, K* is the desired capital stock, K-1 denotes last periods capital stock and δ is the partial adjustment coefficient, which shows how fast the gap K*- K-1 will be closed. A large coefficient of adjustment depicts a faster pace of closing the gap between desired capital stock and the actual stock. In the flexible accelerator model, output, internal funds, cost of external financing and other relevant variables are included as determinants of the desired capital stock. The model may be transformed into a theory of investment behaviour by adding a specification of desired capital stock and a theory of replacement investment. While desired capital stock is proportional to output in the flexible accelerator model, the desired capital stock, in the alternative models depends on capacity utilization, internal funds, the cost of external
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THE financial determinants of private investment in ghana

THE financial determinants of private investment in ghana

The promotion of the private sector has become an integral part of Ghana's broad economic development strategy since it embarked on its Economic Recovery Program (ERP) and the Structural Adjustment Program (SAP) in 1983 and 1986 respectively. Private sector development, which involves the improvement of the investment climate is crucial for sustaining and expanding businesses, stimulating economic growth, and has been the backbone of most developed and developing economies. The private sector is recognized as a critical stakeholder and partner in economic development, by helping people escape poverty through the provision of jobs and income, as well as the availability of necessary goods and services needed to enhance people’s standard of living (International Finance Corporation, 2011). Private investment is thus a powerful catalyst for economic growth and innovation as well as a poverty reduction facilitator and hence its role is important both in terms of its contribution to GDP and its ability to allocate and employ resources efficiently.
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Private Rates of Return to Investment in Technical Education: A Case of Manufacturing Industries in Thika, Kiambu County, Kenya

Private Rates of Return to Investment in Technical Education: A Case of Manufacturing Industries in Thika, Kiambu County, Kenya

The fair distribution across employment of both self and formally employed skilled technical workers could be attributed partly to the micro financing organizations increased funding to start –up business firms. Further, the government of Kenya introduced youth fund where young people can be loaned out money to start businesses as a strategy to alleviate unemployment. The fact that there are more male than female employees can be supported by the fact that there are fewer female than male students enrolled in engineering, building and electrical technical courses. This information appeared to be in line with the long held tradition that women are suitable for „feminine‟ courses such as secretarial, catering, knitting and dressmaking instead of „masculine‟ engineering courses (MoEST, 2003; Ngerechi, 2003; Afeti 2008 and Limboro 2012). The same is translated in the job market where women are fewer than men, either in formal or self employment. Simiyu (2007) observes that the job market for women engineers and women electricians may not be guaranteed at the moment in view of societal idiosyncrasies. This perception, a product of cultural values, is responsible for shaping student attitudes towards TVET subjects.
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A Survey of Private Equity Investments in Kenya

A Survey of Private Equity Investments in Kenya

there are three components which include the acquirers borrowing a significant portion of a publicly traded firm’s value (leverage), taking a key role in the management of the firm (control) and taking the firm off public markets (going private). Lerner et al (2009) indicate that mezzanine financing is mainly PE financing before an initial public offering or an investment that entails subordinated debt with mainly attached warrants. Mezzanine simply provides high-risk debt that carries a high interest rate and often includes other components such as warrants, options or preferred/common shares. Mezzanine finance is often used by private equity investors to reduce the amount of equity capital required to finance a leveraged buyout or major expansion.
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Private higher education in Kenya

Private higher education in Kenya

These private tertiary institutions went largely unnoticed except in the theological domain, which a majority of them served. Part of the reason lies in the fact that from independence up to the late 1980s, the existing public universities were able to absorb virtually all candidates qualifying for higher education, a development that was aided in part by massive government investment in higher education. Suffice it to say that this policy of significant government expenditure on higher education was in line with the recommendations of the first report on education in Kenya (the Ominde Report of 1964), which stressed the importance of university education in producing skilled human resources to run the various facets of the economic, political and social life of the new nation. Indeed, this policy was buttressed by good economic performance in the first two decades of independence.
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Analysis of private domestic investment in Kenya.

Analysis of private domestic investment in Kenya.

Low growth performance in Sub-Saharan Africa has been attributed to low investment to Gross Domestic Product (GDP) ratio.. In the 1990s the ratio of investment to GDP was around 17 per c[r]

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Linking public investment to private investment. The case of the Spanish regions

Linking public investment to private investment. The case of the Spanish regions

Public investment constitutes one of the main instruments of the regional policies. The existence of a direct link between infrastructure and regional income per capita is generally accepted. Also literature describes a positive effect of public investment on private capital accumulation. This paper seeks to offer empirical evidence of this latter relation for the case of the Spanish regions over period 1965-1997. We use a crowding-out theoretical framework and panel data methodology. The results show a positive effect of productive and social public investment (especially in education) on private investment. The spillovers effects generated by productive infrastructures located in other regions do not seem to encourage private investment in an individual region. Public consumption and interest rate exert a negative influence on private capital accumulation. These results are robust to changes in the econometric specification.
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Analysis of the Relationship Between Private Investment and Public Investment in Mexico

Analysis of the Relationship Between Private Investment and Public Investment in Mexico

Abstract: The aim of this study is to identify the relationships between domestic private investment and domestic public investment in Mexico. The hypotheses are as follows: H1 – Domestic public investment generates domestic private investment (period between 1993 and 2017); H2 – Domestic public investment generates domestic private investment (period between 1993 and 2008); H3 – Domestic public investment generates domestic private investment (period between 2009 and 2017). In order to analyze the relationship between the variables in this study we used the quarterly data series on public gross fixed capital formation (public GFCF) and private gross fixed capital formation (private GFCF) provided by the Mexican System of National Accounts, corresponding to the period between the first quarter of 1993 and the second quarter of 2017. In order to fulfill the aims of this study, the following stages were performed: identification of the time series models, using the methodology consisting of autoregressive integrated moving average models or ARIMA models; validation of the models identified; determination of the cross correlation function; and regression analysis of the transformed series. The main results of the study for the series from 1993 to 2017 show a statistically significant direct relationship between private investment and public investment. This confirms hypothesis 1: Domestic public investment generates domestic private investment (period between 1993 and 2017). The value of the Durbin-Watson statistic for this model is 2.103, meaning that the residuals are independent. The value of the constant in the model is not statistically significant. For the series from 1993 to 2008 there is a statistically significant direct relationship between private investment and public investment. This confirms hypothesis 2: Domestic public investment generates domestic private investment, and the residuals are independent. With regard to the results for the series from 2009 to 2017, there is a statistically significant direct relationship between private investment and public investment. This confirms hypothesis 3: Domestic public investment generates domestic private investment (period between 2009 and 2017). The value of the Durbin-Watson statistic for this model is 1.74, meaning that the residuals are independent. The value of the constant in the model is statistically significant.
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Tobin's Q, investment, and endogenous adjustment of financial structure

Tobin's Q, investment, and endogenous adjustment of financial structure

The u t i i z e s frameworks developed by Abel and Blanchard and Brock and Turnovsky I n t h i s dynamic, general e q u i l i b r i u m model of savings and investment, t h e r e l a t i o n between i n v e s t o r s ' p o r t f o l i o d e c i s i o n s and t h e d e c i s i o n s o f f i r m s i s c l e a r l y exposed. The l i n k between households and f i r m s i s the c o s t o f c a p i t a l , d r i v e n by t h e r a t e s o f r e t u r n r e q u i r e d by households. Firms, f a c i n g t a x r a t e s f a v o r i n g debt, and a c o s t of debt, choose t h e d e b t - t o - e q u i t y r a t i o i n o r d e r t o t o minimize the c o s t o f c a p i t a l .
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Adjustment, investment, and the real exchange rate in developing countries

Adjustment, investment, and the real exchange rate in developing countries

They packages from the IMF and the World Bank has show more signs of improving efliciency and becn the heavy emphasis on real exchangc rate less decline in investment than do exporters[r]

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