International Journal of Economics

Effect of Trade Openness and Agriculture on Tax Revenue Performance in Kenya

Jordan Moses — 2023-09-29

Purpose: Taxes play a critical role for most governments around the world in funding investments in capital, infrastructure and the delivery of essential services. The study therefore sought to examine the effect of trade openness and agriculture on tax revenue performance in Kenya.

Methodology: The study adopted correlational research design, Vector Error Correction Model (VECM) mechanism and Granger causality test to establish the relationship between the study variables. The choice of the VECM was influenced by its ability to estimate both short run and long run relationships. The theoretical framework of the study followed Heller’s neoclassical maximization utility approach. Annual time series data for the study were sourced from the World Bank Development Indicators for the period 1980-2020.

Results: The study findings established that in the long-run agriculture share (-0.64, t-statistics = 14.57) and trade openness (-0.08, t-statistics = 3.88) have negative and significant effect on tax revenue performance in Kenya. The Pairwise Granger Causality test results indicated unidirectional causality running from tax revenue performance to trade openness. This suggests that tax rates have effect on trade openness in Kenya.

Unique Contribution to Theory, Policy and Practice: The study adds to literature by proving the Arthur’s Laffer curve theory which advocates for lowering tax rates in order to boost productivity and encourage expansion of corporation. The findings of the study may provide the National Treasury with foundation for policy formulation and analytical framework for estimating the associated tax revenue with variables under consideration in this study. The study may be of importance to KRA in determining appropriate tax rates that are favorable in boosting revenue mobilization.

Effect of Per Capita Income on Youth Unemployment in Kenya

Jerry Okuom — 2023-09-23

Purpose: The objective was to determine the effect of per capita income on youth unemployment in Kenya.

Methodology: The study was anchored on Okun’s law, which predicts a 1% drop in employment from a 2% drop in GDP. The study used the World Bank Database’s quantitative time series data from 1991–2021. The choice of the ARDL was based on the ability of the model to give long-run and short-run analyses of stationary and non-stationary variables. Pre-estimation procedures and diagnostics tests were used to determine the stability of the model.

Findings: Findings revealed a significant negative relationship between per capita income (-0.3666, p = 0.013) and youth unemployment in the long-run. The speed of adjustment (-0.89999, p = 0.0001) from the short-run to the long-run is evident.

Unique Contribution to Theory, Practice and Policy: This study may help academicians develop their knowledge of youth unemployment. It may increase understanding of per capita income as an indicator of growth and its application in Okun’s law. The Salaries and Remuneration Commission (SRC) may benefit from this study by creating better packages of salaries, allowances, and mortgages that may attract and improve the standard of living of Kenyan youth. The Public Service Board (PSB) may establish youth-friendly offices to motivate youth to stay in the labour force. Moreover, this study may guide the State Department for Youth Affairs to promote youth employment and increase labour productivity in Kenya. The State Department of Gender may use the study in gender mainstreaming and gender policy management. Policymakers will assess the effectiveness of the curriculum in preparing youth for the job market. An increase in labour productivity will result from increasing youth employment.

Contraceptive Switching among Homeless Women in Kenya

Pkaremba Cheruto — 2023-11-25

Purpose: The paper examines contraceptive-switching behaviors among homeless women in Nairobi, Kenya. High mortality and morbidity rates in Kenya are mainly a result of unplanned pregnancies, discontinuation of contraceptives, and switching of contraceptives. These incidences can be reduced through improved access to a wide variety of contraception and counseling services that allow homeless women to make informed decisions. Switching from one contraceptive to the other often lowers contraceptive preventive abilities putting women at risk of unplanned pregnancies

Methodology: The study was carried out in Nairobi, Kenya. The study utilized primary data collected from a sample of 384 households in Nairobi. A Cluster case-control and observational study design was used to sample the population. Off slum settlements were randomly chosen and systematic random sampling was used to select female household members to be interviewed. The study sampled 8 groups of subjects per study area which are the CBD alleys and the off-slum settlements of Kibra, Korogocho, Mathare, Mukuru Kwa Reuben, Majengo, Kawangware, and Huruma Slums. Questionnaire responses were then extracted and analyzed using STATA software. Estimates were then regressed using logistic regression.

Findings: The logistic estimates further reveal that as a homeless woman gets more educated, she will tend to switch contraception less often. The study found the predicted probability of educated women switching contraceptives to be 1.32%. The study also found that women who had lived in the streets had a 0.89% possibility of switching contraceptives. The study further noted that women who experienced miscarriages, stillbirths, or had aborted in the past 12 months were 4 times more likely to switch contraceptives than women who hadn’t. Results derived from the regression show further show that immigrating from an urban area and having knowledge of Intra-uterine devices (IUDs), increases the chances that a homeless woman will switch contraceptives.

Unique Contribution to Theory, Practice and Policy: There exists limited research on the reproductive health practices of homeless women in Kenya as more studies are focused on refugees, street children, and slum dwellers. This study therefore adds to knowledge on contraceptive utilization among homeless women. Over the years the government has initiated programs and policies to reduce the population in Kenya. However, these policies have had less impact on population control among street families in Kenya. The government in its efforts to control fertility, can utilize the findings of this study to come up with an optimal contraceptive mix, unique to the needs of homeless women in Kenya. The study is also critical in understanding the role of knowledge on contraceptive utilization among homeless women. Knowledge of contraceptives can also be improved through outdoor reproductive health campaigns and the establishment of mobile clinics to improve homeless women’s accessibility to reproductive health services.

Efficiency Analysis of the Food and Beverage Industry in Tanzania: A Comparative Analysis

Veneranda Lufano — 2023-09-23

Purpose: This study examined the performance of food and beverage industries in Tanzania in terms of productive and technical efficiency. The specific objectives of the study were to evaluate the productive efficiency performance of food and beverage industries in Tanzania, to determine the level and trend of efficiency of food and beverage of food and beverage industry in Tanzania, and to assess the levels of productive efficiency performance in the food and beverage subsectors in Tanzania

Methodology: The study used secondary data to achieve its objectives. The study employed a Panel data analysis technique using 40 companies in the manufacturing sector over a period of three years, 2018-2020. A stochastic frontier production model was applied using a linearized Translog production function to determine the performance elasticity coefficients of inputs and technical efficiency. The study used production theory advanced by Koutsoyiannis (1979) to explain the relatonship between input and output factors.

Findings: One of the key findings was that the level and trend of efficiency in food and beverage industry demonstrated an upward trend for the period between 2018 and 2020 as evidenced by the changes in average in both food and beverage sub-sector which grew from 0.776 in 2018 to 0.7557 in 2019 and finally to 0.7746 in 2020. Another finding of the study was that, the individual productive efficiency distribution between food and beverage sub-sector revealed that beverage sub-sector performs much better than food sub-sectors, with an average technical efficiency of 77.85% and 81.36% for both food and beverage sub-sectors, respectively.

Unique Contribution to Theory, Practice and Policy: The study’s unique contributions to theory include its assessment of efficiency levels, analysis of efficiency trends, and exploration of sector-specific variations. Its practical contributions encompass policy recommendations, guidance on modernization and technology adoption, and the importance of skills development and export promotion. These insights have direct implications for policymakers, industry stakeholders, and practitioners in Tanzania's food and beverage sector, aiding in the formulation of effective strategies to enhance efficiency and competitiveness.

The study recommends that the government and other stakeholders comes up with policy reforms to address the underlying factors contributing to the underutilization of each firm’s production capacity. This includes reforming the input market in the manufacturing sector in order to increase the level of efficiency to 100%. There should be establishment of an efficient marketing mechanism that reduces the involvement of many parties in the supply chain and hence high transaction costs.