Kenya is ranked second in Africa in integration into the global political economy. The 2014 report published by Visa Africa, a firm that ranks countries on the basis of integration index indicated that Kenya is among the fastest growing country with regards to economic integration. It was ranked behind Rwanda after rising from an index of 51 in 2013 to an index of 55 in 2014 out of the possible 100 points (Haggard, 2005). Rwanda was the fastest ranking at 47 points in 2014 from 40 in 2013. The growth in global integration is highly attributed to the advances Kenya made in regional integration such as ability to transact with overseas countries. Kenya has made significant improvements in order to protect property rights and deepen economic integration with new partners as well as the existing ones. In 2013, a single visa was launched to jointly facilitate the movement of people between Kenya, Rwanda and Uganda. Since 2000, Kenya has been in the forefront in broadening its relationship with traditional partners such as the United States, Britain, Germany, Canada, and Italy among others as well as developing new ones such as China, Qatar, Japan and Malaysia through diversification of products including coffee, flowers and tea. Kenya’s global integration stems from its good relationship with the neighboring countries and then extends to the rest of the world. Since 2000, inter-World flows have increased significantly, a key reason why Kenya ranks high in global integration. Kenya believes in trade in harnessing natural resources, stimulating wealth and accomplishing prosperity. Cross-border openness and interactions are the main drivers of economic integration and social advancement. In its effort to deepen global integration, Kenya has joined several global and regional trade blocs. In 1964, Kenya became a member of general agreement on tariffs and trade (GATT) while in 1995 it joined the world trade organization (WTO). Other trade agreement in which Kenya is a signatory includes COMESA, ANGOA and the Africa Free Trade Zone (Haggard, 2005). It is expected that the notable improvements in infrastructure in Kenya will deepen global integration by bringing down the cost of production and ultimately the cost of doing business.
After gaining independence in 1963, the first Kenya’s president Mzee Jommo Kenyatta went the western capitalism route. Under this economic policy, managers and entrepreneurs pool together resources, technology and labor in order to produce goods and services. Kenya has since then been described a capitalist economy (Barkan, 2001). A small portion of the population controlled most of the wealth, capital, and money and was responsible for making economic decisions during this period. As Carl Max observed, capitalism is characterized with concentration of power in the hand of few rich individuals whose intentions are to maximize their wealth. Since year 2000, the Kenyan government has intervened in order to address the social challenges that results from unchecked private sector interests. Kenyan economy can therefore be described as a mixed economy since the government as well as the private sector play key role in regulating the production of goods and services (Barkan, 2001). There have been disagreements however by Kenyans about belief in drawing a clear boundary between government Involvement and the free hand mechanism. So far, the mixed economy has proven to be successful as opposed to pure capitalism. The mixed economy currently practiced in Kenya has revolutionized the involvement of government leading to the rise of strong middle class earners, increased living standards and more democratic successive regimes. Many partnerships between the government and the private sector in areas such as healthcare, education, financial sector have been observed. The aim of these partnerships is to improve the health of the Kenyan people, eradicate poverty and reduce the level of unemployment.
The Kenyan economy continues to grow with increasing economic growth rates. In the year 2000, GDP rose with 0.5% after weak macro-economic challenges it faced in 1999. Since 2000, the government has made significant efforts including rationalization of its expenditure, maintaining effective monetary policy in order to maintain the money supply within the 8% economic growth target (United States, 2007). Further, the parliament in 2000 amended the central bank bill that sought to fix lending rates and interest rate charged by commercial banks. As at the beginning of year 2000, the total Kenya’s outstanding debt was estimated to be $6.5 billion whereby approximately 51% was owed to multinational companies. Kenya has within the last ten years put in place structural adjustments including the removal of price and import controls as well as the abolition of foreign exchange controls. The foreign investment act was enacted to streamline investments. The rate of unemployment in Kenya increased to approximately 40% in 2011 from approximately 12.7% in the year 2006. According to the bureau of national statistics, the average level of unemployment was 22.5% between 2000 and 2010. Inflation rate on the other hand averaged to 10.8% from 2004 to 2014. It was highest in May 2008 at 31.4% and lowest in October 2010 at 3.2% (United States, 2007). In overall, Kenyan economy continues to recover from political and economic slowdown experienced during change of regimes. Real GDP is expected to grow at a rate of 5.8% by the end of 2015 while inflation is expected to remain a single digit. The structural adjustments put in place in agricultural, healthcare, transport, information and technology sectors are expected to steer Kenya to next phase of development.
The Kenyan GDP per capita based on purchasing power parity has continued to rise from approximately 1216.88 (0.42%) in 2000 to 1675.918(3.7%) in 2010 and is expected to hit 5% by the end of 2015 (Watson, 2000). Corruption and high unemployment levels remain the biggest challenge to social and economic growth in Kenya. The promulgation of the new constitution in Kenya in 2010 guarantees Kenyans of better governance and reduced inequality. Previous regimes have been characterized by massive embezzlement of public funds leading to poor performance of the economy. The formation of the 47 counties under the new constitution guarantees Kenyans of equitable allocation of national government resources to the counties. Poverty level is still rampant with over 50% of the Kenyan population living below one dollar per day. The high poverty level has been attributed to landlessness, subsistence farming, lack of basic education and poor governance (Watson, 2000). The level of illiteracy stood at 20.7% by the end of year 1999 but since 2000, the government has increased primary school enrollment through construction of more classrooms. The government has increased expenditure on education every year hitting an average of 7% of the GDP per annum between 2000 and 2010. In healthcare, the government has put in place measures to increase access to quality healthcare. By the end of 2003, approximately 78% of the Kenyan population had access to healthcare compared to the 60% overall African rate (Watson, 2000). Epidemics such as diabetes, malaria, HIV and Cancer are the major contributors to deteriorated health situation in Kenya.
The Big Picture
The trends in the indicators of social performance, economic performance, global integration and state policy clearly suggest that there is an increasing tendency among countries to engage in global political economy (Nyamache & Nyambura, 2013). This tendency has resulted in adoption of robust policies that are geared towards improving the overall social and economic performance of these countries. The global political economy exerts ressure on countries and influences them to act in a certain way. Countries are becoming cautious of adopting policies that contravenes the global political economy because the consequences are costly. In a nutshell, the global political economy is shaping the manner in which policies are made and implemented across different areas in the world. Developing countries are now looking at things from a wider perspective through benchmarking with bigger economies such as the United States, Germany and Britain. As a result, robust policies touching members of the public are being implemented to improve economic and social welfare. Most developing countries are seeking consultation from the western countries before making key decisions affecting the economic and social well-being of the people. This is what is embedded in global political economy (Hemisphere, 2011). It is the intent of global political economy to create conducive environment for the people by introducing democracy and good governance that in turn results into improved economic, social, political, technological and cultural welfare for the benefit f the people.
Watson, M. A. (2000). Modern Kenya: Social issues and perspectives. Lanham, Md: University Press of America.
Barkan, J. D. (2001). Beyond capitalism vs. socialism in Kenya and Tanzania. Boulder: L. Rienner.
Haggard, S. (2005). Developing nations and the politics of global integration. Washington, D.C: Brookings Institution.
Hemisphere, D. I. M. F. W. (2011). Regional Economic Outlook, October 2011. Washington: International Monetary Fund.
Nyamache, Tom, & Nyambura, Ruth. (2013). Globalization, Development and Multi-National Corporations (MNCs): The Kenyan Scenario. The International Institute for Science, Technology and Education (IISTE.
United States. (2007). Kenya … performance report. Washington, D.C: U.S. Agency for International Development.