Determinants of Foreign Exchange Inflows to Kenya; 1980-2014

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Foreign aid is a post-world war II phenomenon that came about when western states had the notion that poor countries were in a low income equilibrium trap and needed to supplement their low income savings with foreign savings in the form of official development assistance (ODA) and  foreign  direct  investments  (FDI).  All  this  was  done  to  promote  capital  formation  and increase economic growth. Aid also had other objectives which included poverty alleviation, bridging the gender gap and promoting good governance. The main objective of the study was to understand the determinants  of foreign resources to Kenya both bilateral and multilateral  to government and civil societies. The specific objectives of the study were; to identify the determinants of trade flows to Kenya; to examine the determinants of foreign direct flows to Kenya; and to investigate the determinants of official development assistance to Kenya. The study used a research design that is descriptive in nature. The research reviewed recent literature on  the  determinants  of  foreign  aid  allocation  to  Kenya  both  bilateral  and  multilateral  aid. Secondary data was collected from World Bank development indicators, surveys conducted by the Kenya government, strategic plans, financial and narrative reports, publications, policy documents and other relevant documents.

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