Determinants of Kenya's exports to the European Union - A gravity model approach
Saved in:
| Main Author: | |
|---|---|
| Other Authors: | |
| Format: | Thesis |
| Kulcsszavak: | Export Tőkebefektetés Infláció EU Kenya |
| Online Access: | http://dolgozattar.uni-bge.hu/16591 |
| Abstract: | The main objective of this study is to identify the determinants of Kenya’s exports to the European Union (EU-28) countries between 2006 and 2016, employing the Gravity Model of International Trade. The results can then be used to determine if the model can be used to explain the bilateral export flows between Kenya and the EU. In the standard version of the gravity model, we take into account the basic factors as suggested in literature; value of exports, Gross Domestic Product (GDP) and the geographical distance between Nairobi and the EU capital cities. The supplementary variables included in the model include total population in Kenya and the individual EU countries during the period, in addition to language similarity, incidences of general elections in Kenya, colonial history and whether the countries are landlocked as the dummy variables. This study employs the Poisson PseudoMaximum Likelihood(PPML) estimation in a panel data framework. From the findings, the Kenyan export flow to the European Union increases with increase in EU’s economic size, depicting a positive impact of the importers’ absorption capacity, in comparison with Kenya’s production capacity that has a negative impact. Increase in Kenya’s population leads to an increase exports to the EU, although this is not significant. In contrast with the gravity model’s expectation on distance, the variable has a positive relationship with the value of exports to the EU. Domestic political instability depicted a diminishing effect on the export flow while Kenya tends to export more to EU countries with coastlines. Language similarity depicted a positive relationship with the export flow. Key words: Kenya, EU-28, Gravity Model of International Trade, PPML method, panel data |
|---|