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Foreign Direct Investment In Kenya Essay

1343 Words6 Pages

Modelling of the relationship between economic growth and inflation volatility on foreign direct investment in Kenya.
Foreign Direct Investment (FDI) is an investment made by an entity or a company based in one country, into a company or an entity that is based in another country. FDI substantially differs from indirect investments like the portfolio flows whereby foreign institutions invest in equities that are listed on the stock exchange of a nation. The foreign investing company makes its investments in various ways such as setting up an associate or a subsidiary company in the foreign country, through acquiring shares of an overseas country or through a joint venture.
FDI plays a very crucial role in the financial growth and development …show more content…

Apart from the robust infrastructure, the country also has an educated and skilled workforce and is a member of the regional trading blocks such as the EAC.
It is important to understand entirely the aspects of FDI inflows given the objectives of host countries to attract high quality investments.
The prime of this project is to research on the role played by inflation and economic growth in driving the foreign direct investment. Inflation in Kenya increased by an average of 11.67% during the 1980s, and was followed by an upsurge of 13.93% on average between years 1990 and 1995. The trend of increasing inflation reversed in the late 1990s; the inflation on average decreased to 8.53% during the turn of the new millennium, a period during which the net FDI flows more than doubled.
Gross domestic product (GDP) is the market value of all final goods and services produced within a country in a given year. There was a constant GDP in the 1980s of about 4.54% in Kenya. This rate declined sharply in the 1990s to an average of 2.1084%.Between years 2003- 2007, there was an increase in the rate of up to 6.993%, a period during which the net FDI more than

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