International Journal of Business and Economics Volume 10, No. 3 December, 2011

Determinants of FDI Spillover in the Kenyan Manufacturing Industry: Firm-Level Evidence

Geoffrey G. Gachino

Faculty of Business Administration, University of Dubai, United Arab Emirates

Abstract

Technological spillovers from foreign direct investment and their determinants and impacts in a host country's growth process are some of the most widely debated issues in development economics. The proponents of endogenous growth theory and evolutionary economics contend strongly that spillovers have positive ramifications for economic growth. This paper adopts a framework re-conceptualizing spillovers in terms of learning and capability building to examine the determinants of spillovers in the Kenyan manufacturing industry. From the results, key determinants of spillovers included systemic support structure, absorptive capacity, firm learning, systemic embeddedness, firm training, and trade orientation. The findings provide possible implications for policy makers.

Keywords：foreign direct investment, technological spillovers, technological learning, systemic support structure, systemic embeddedness, Kenya.

JEL Classifications：F2, L1, L6, O1, O2.

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