Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 142: Kenya’s Development Path and Factor Prices 1964-2000
Arne Bigsten () and Dick Durevall ()
Additional contact information
Arne Bigsten: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 40530 GÖTEBORG
Dick Durevall: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 405 30 GÖTEBORG
Abstract: This study analyses how changes in factor abundance and trade policy have affected factor prices in Kenya since 1964. First there was a period of capital deepening, but this was reversed from 1982. As a result, there has been a shift of production towards the labour-intensive informal sector. The econometric analysis shows that in the long run factor proportions determined relative factor returns; for instance, an increase in the capital-labour ratio raised the wage-capital rental ratio. We did not find any significant impact of changes in goods prices, due to among other things changes in trade policy, on factor returns.
Keywords: Factor abundance; trade policy; globalisation; factor prices; Kenya
41 pages, August 16, 2004
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