Explaining African Economic Growth Performance : The Case of Kenya

The objective of this study is to explain Kenya’s economic growth performance from the 1960s to the 1990s, drawing on growth accounting decompositions and cross-country endogenous growth literature. The analysis provides guidance on what factors are important in explaining aggregate growth in Kenya over time. The study explains why the good economic performance in the 1960s and early 1970s was not sustained in the subsequent periods. The years between the late 1970s and late 1990s were characterized by persistently low growth and limited economic transformation, despite the maintenance of a large measure of political stability over that time, and a fairly consistent development strategy. But in the 1990s,the introduction of competitive politics evoked ethnic tensions revolving around land ownership and control of the state. This has tended to create uncertainty and to add to the poor growth performance. The Kenya case thus seems to fit in the category of countries suffering from regime shifts. Regime shifts geared towards some form of redistribution for political expediency destroy the policy environment and the incentive structure for economic agents and thus help explain the poor growth performance and rising poverty in the 1990s.