In the past decades, Kenya experienced growth in its exports. This paper explores the major factors affecting Kenya’s exports. This paper attempts to examine Kenya trade with its 17 main trading partners using an econometric gravity model between 2000 and 2008. In the model, the bilateral trade is a linear function of GDP, Geographical distance, inflation, openness, and the dummy variables RTA and LIC. The empirical results show that the explanatory variables, GDP (importing and exporting country), openness and level of industrialization have positive significant effect on Kenya’s export trade. Population (exporting country) has negative effects as expected. Three other explanatory variables, population (importing countries), distance and RTA membership do not significantly affect Kenya’s exports.
The implications of the results are many, first trade must be liberalized to enhance Kenya’s trade. Bilateral trade in Africa is affected by poor infrastructure network. Hence improvement in infrastructure may be a necessary step for successful trade flows in Africa. The flow of trade in the regional bloc is constrained by problems of overlapping membership, policy harmonization and problems with compensation issues, among others.
