Abstract: The flow of FDI, foreign debt, foreign aid and remittances from countries of origin to developing countries has raised debate on the development potential in receiving countries. These foreign capital inflows enhance the economic growth of the recipient countries as they are used for development and poverty alleviation. This study aimed at establishing the relationship between foreign capital inflows and economic growth of Kenya using Panel data for the period 2000-2015. Some of the factors pointed out in the literature include remittances, foreign aid, foreign debt and FDI. The study used causal research design and Ordinary Least squares method. Data was collected using a data collection sheet which was cleaned and coded. The data was analyzed using multiple linear regressions method. The findings have established that there is a relationship between FDI inflow and GDP of Kenya. The study has also established that the relationship between foreign debt and economic growth in Kenya is negative. As foreign debt increase, economic growth deteriorates. The study has further established that remittances indicators are the most significant factors influencing the economic growth in Kenya. Finally, the study has established that on average foreign Aids had more negative impact on GDP growth in the 2004 relative to early 2014.
Keywords: Balance of Payment, Budget aid, financial globalization, Market imperfections.
Title: The Relationship Between Foreign Capital Inflows And The Economic Growth Of Kenya
Author: Beatrice Muigai, Dr. Muturi Willy
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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