Foreign Direct Investment, Trade Openness and Economic Growth in Kenya: Empirical Analysis Using ARDL Approach

Abstract

The long-term impacts of trade openness and foreign direct investment on Kenya's economic growth are examined in this study. (1975–2021). using the ARDL (autoregressive distributed lags) model the findings imply that trade openness, economic growth, and foreign direct investment inflows (FDI) have a long-run stable co-integration relationship. Short-term trade openness was found to have a favourable and considerable impact on foreign direct investment. However, it ultimately found out that the influence was negligible over time. Similar to how trade openness had no impact, economic growth had a favourable and long-term influence on FDI. The report suggests that FDI be directed towards industries that are focused on exports and that export-led growth methods be promoted in short-term development plans.