Determinants of Foreign Direct Investment Inflows in Kenya

Abstract

Empirical literature on the determinants of FDI flows is extensive but controversial over some determinants of FDI in-flows in developing countries. The objective of this study therefore is to investigate the overall determinants of FDI inflows in Kenya. Dynamic macroeconomic theory and correlational study design provided theoretical framework and specification of a time series multiple regression model. The study used data observed from 1970 to 2015 in World Development Indicators (WDI) data bank. The results show that annual growth rate of GDP, inflation rates and external debt as a proportion of GDP are significant determinants of FDI inflows in Kenya and are therefore important macroeconomic parameters for policy formulation meant for promotion of FDI inflows in Kenya.