ABSTRACT
Over time globalization has created investment opportunities for enterprise worldwide
and as a result today foreign direct investment is regarded as the major source of foreign
capital for developing countries. There are numerous benefits of foreign direct investment
for emerging economies which include technology spillovers, enables human capital
formation, improvement of international trade integration, helps create a more
competitive business environment and improves enterprise development. All of these
result in higher economic growth, which is a crucial tool for alleviating poverty in
developing countries. Following the passing of the new constitution in 2010 Kenya
adopted a new system of governance that devolves major responsibilities to the counties
aiming at better management and control of the countries resources. The main objective
of the study was to investigate the effects of devolution on Foreign Direct Investment in
Kenya. The specific objective of this study were to: find out the effect of decentralization
of resources on FDI; to establish the effect of decentralization of authority and
responsibility; to determine the effect of decentralizing legislative powers on FDI, to
assess the effect of decentralized institutional reforms on FDI; to determine the effect of
having many autonomous financial units in the country and to evaluate the effects of FDI
on the economy. Descriptive survey study design was used to conduct this study. The
study targeted Kenya Investment Authority Officials, Investors, Foreign Embassy
Officials, and County Public Service Board Officials in Nairobi county Kenya. Purposive
sampling technique was used in respondent selected. The total sample size was 42
respondents. The data was collected using questionnaires with both open and closed
ended questions. The collected data was analyzed to give percentages and frequencies as
well as inferential statistics. The Statistical Package for Social Sciences (SPSS) software
version 21 was used in the analysis. The analyzed data was presented using tables
generated through SPSS and figures generated through Microsoft excel 2010. Analyzed
data was thematically arranged based on the research objectives. All ethical and logical
considerations pertaining to research were observed throughout the study. The study
found out that decentralization of resources contributed highly to foreign direct
investments. Majority of the respondents indicated that decentralization of legislative
powers affected foreign direct investment in the Country; the power to raise revenue in
the Counties also enhanced developments; hence increasing FDI. The study concludes
that there is a positive and significant relationship between decentralization of resources
and FDI in Counties in Kenya. The study also concludes that decentralization of
legislative powers significantly enhances FDI in Counties. Through devolution, the
County Assembly members have legislative powers, through which they make
regulations aimed at improving investments in their region. Decentralization of
autonomous financial units have enhanced independent revenue collection; and enhanced
the ability by county governments to allocate funds for infrastructural development; and
also enhanced their own marketing activities, which have attracted more foreign
investments. The study recommends that the national government should channel more
resources to the Counties so as to enhance developments; for instance, of improving the
quality of infrastructure, especially in marginalized regions of the country, so as to attract
FDI. The County governments should develop foreign investment policies, which will act
as a supplemental part of the domestic development policy. The policies should guide the
Counties on how to engage with foreign investors.
KAMAU, J (2021). Devolution And Its Effects On Foreign Direct Investment In Kenya. Afribary. Retrieved from https://afribary.com/works/devolution-and-its-effects-on-foreign-direct-investment-in-kenya
KAMAU, JOHN "Devolution And Its Effects On Foreign Direct Investment In Kenya" Afribary. Afribary, 01 Jun. 2021, https://afribary.com/works/devolution-and-its-effects-on-foreign-direct-investment-in-kenya. Accessed 03 Oct. 2024.
KAMAU, JOHN . "Devolution And Its Effects On Foreign Direct Investment In Kenya". Afribary, Afribary, 01 Jun. 2021. Web. 03 Oct. 2024. < https://afribary.com/works/devolution-and-its-effects-on-foreign-direct-investment-in-kenya >.
KAMAU, JOHN . "Devolution And Its Effects On Foreign Direct Investment In Kenya" Afribary (2021). Accessed October 03, 2024. https://afribary.com/works/devolution-and-its-effects-on-foreign-direct-investment-in-kenya