n African Journal of Science, Technology, Innovation and Development - Labour productivity, exports and skills formation : comparing foreign and local firms in Kenyan manufacturing : research paper

Volume 3, Issue 1
  • ISSN : 2042-1338
  • E-ISSN: 2042-1346
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This paper uses firm-level panel data from Kenyan manufacturing industry to compare labour productivity, export and skills formation between foreign and local firms. Given the superior productive capabilities and market access of multinational firms, foreign direct investment (FDI) is considered to enjoy greater potential to generate labour productivity, manufactured exports and skilled labour than local firms in poor economies. The paper also examines how FDI affects labour productivity, export and skill formation as one of the determinants - among others. The results generated shows that, although local firms generally fared better than foreign firms involving the growth of labour productivity, exports and skilled labour, foreign firms continued to enjoy higher shares. FDI had a positive relationship with labour productivity, exports and skill formation. Overall, it can be claimed that FDI has generally impacted positively on Kenyan manufacturing labour productivity, exports and skilled labour. The positive results of positive impact of FDI have been obtained despite low levels of FDI. The implication is that FDI should be promoted but in tandem with domestic industrial policies which ensure enhanced learning, capability development and innovation.

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