An Empirical analysis of inclusive growth in Kenya measurement, determinants and policy recommendations

Abstract

This study examines inclusive growth in Kenya. The call for inclusive growth has been broadcasted the world over by policy makers. However, there seems to be very little understanding and very small steps towards the achievement of significant inclusive growth. A unified measure of Inclusive growth is estimated by integrating economic growth performance (to capture growth) and income distribution properties (to capture equity).This allows us to capture inequality as well as economic growth. The unified measure is then regressed against a set of variables that are used in growth and inequality analysis in order to identify the determinants of inclusive growth. Results indicate that inclusive growth in Kenya from 1978-2005 had large shocks in the 1990s, but largely remained non-inclusive before 1992 and inclusive briefly after 2002 till 2005.0f the variables used in analyzing the determinants of inclusive growth, only trade openness and financial deepening are found to be statistically significant, positively and negatively respectively.