EFFECT OF FISCAL POLICY ON FOREIGN DIRECT INVESTMENT INFLOWS IN KENYA

Pearl Kemunto Evans (), Dr. Peter Kariuki () and Dr. Fredrick Wafula ()

International Journal of Finance and Accounting, 2022, vol. 7, issue 1, 33 - 59

Abstract: Purpose: The purpose of this study was to assess the impact of fiscal policies on Kenya's foreign direct investment inflows. The independent variable included fiscal policy with external public debt, domestic debt, infrastructure and tax. Materials and Methods: The research attempts to explain the FDI inflows in Kenya and was calculated quarterly on the basis of FDI inflows in the nation. For 20 years (January 1998-December 2017) secondary data were gathered annually. In order to investigate the association between the variables the study utilized a descriptive research methodology using a time series model. For data analysis objectives, Python software was utilized. Results: Regression of coefficients results shows that government expenditure on infrastructure and FDI are positively and significantly. It was also revealed that external debt and FDI are negatively and significantly related. Domestic debt and FDI are negatively and significantly related. The results regression results showed that taxation measured as tax revenues and FDI are positively and significantly related. Unique contribution to theory, practice and policy: The study findings validate the internalization theory. Findings indicate that the theory is applicable in the study of investments. In addition, the findings may in future serve as platform for additional studies in the same subject for other academics, students and researchers. Investors would benefit from the recommendations set out in this study to attract more FDI investment by implementing trade-balanced actions, limiting corruption, implementing income-collection tax policies and promoting international trade to ensure competitiveness in Kenyan products.

Keywords: Fiscal Policies; Foreign; Direct Investment Inflows (search for similar items in EconPapers)
Date: 2022
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