Determinants of Regional Economic Growth in Kenya

This research empirically explores the determinants of Kenya’s regional economic growth in the 47 counties over the period 2014 to 2017. Though economic policies aimed at enhancing regional growth were implemented, the economic performance has not been satisfactory hence the study seeks to find out what determines economic performance at the sub-national level. This research is based on the reduced Solow-Swan growth theoretical framework. The analysis techniques that were used in this study were descriptive and inferential statistics. All target variables except economic growth and electricity infrastructure were found to be stationary when LLC test for panel unit root was applied. Once cointegration was established using Kao test, the long-run and error correction estimates of the ARDL regression were attained after subjecting the model to diagnostic tests. This study has identified public investment, government consumption, electricity infrastructure, quality of governance, and institutions as the main determinants of regional growth in the long-run. On the other hand, the outcome from the short-run regression equation has identified human capital and budget utilization as the key sources of growth. This implies in order to effectively boost economic growth in counties, policies and resources should be directed at looking into the key factors which influence public investment, electricity infrastructure, and government consumption. This accelerates overall regional growth performance in the short-term and expands capital buildup in the long-run