CHAPTER FOUR

Data Analysis, Interpretation and Discussion of Findings

4.1 Introduction

In this chapter, we provide results and interpretation of analyzed data and relate it to
empirical literature.

4.2 Descriptive Statistics

Table 4.1 Descriptive statistic

Descriptive Statistics
Std.
N Minimum Maximum Mean Deviation
Real GDP Growth 36 -4.1 10.3 4.628 2.6487
Rate
Exports 36 131515.90 269357.80 172340.8136 36147.07592
Imports 36 321466.60 659052.30 474234.6208 97939.19445
Volume of trade 36 51305600000 91791730000 59246003611 23036335198
0 00 11.11 32.480
Valid N (listwise) 36

Source: Researchers, (2024)

4.2.1 Real GDP.

The average mean of Real GDP is 4.628. The standard deviation is 2.6487 and extends from
a minimum of -4.1 to a maximum of 10.3.

Real GDP Growth Rate

12
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Quarter
Q1
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-2
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-6 ye 2015 2016 2017 2018 2019 2020 2021 2022 2023
ar

Real GDP Growth Rate

Figure 4.1: Real GDP growth

Source: Researchers, 2024

The trend appears to be fluctuating over the years with periods of growth followed by slight
contractions. From 2015 to 2016, the GDP growth generally maintains a positive trajectory
with minor fluctuations. There is a slight decline in growth around 2017 to 2018 but it
quickly recovers. The growth rate seems to stabilize around 2019 but experiences a notable
decline in 2020, likely due to external factors such as the COVID-19 pandemic. The growth
rate shows signs of recovery post-2020, with a significant increase observed in 2021,
followed by relatively stable growth rates in 2022 and 2023. Therefore, the trend suggests a
resilient economy with periods of growth interrupted by occasional downturns, most
economies facing both internal and external economic factors.

4.2.2 Export Value

The average mean of exports is 172340.8136. The standard deviation is 36147.07592 and
extends from a minimum of 131515.90 to a maximum of 269357.80.

Chart Title
300000

250000

200000

150000

100000

50000

0
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
2015 2016 2017 2018 2019 2020 2021 2022 2023

Figure 4.2: Export Value

Source: Researchers, 2024

The trend shows there is a slight overall fluctuation of exports over the years as indicated by
the graph. There is a slight drop of exports from 2015 to 2016 and an overall increase from
2017 to 2019 which shows a positive trend in the market. In 2020, there is a great fall of
exports due to the Covid-19 pandemic which disrupted international trade. In 2021, there is
an increase in exports as the economy recovers from the effects of the pandemic and
subsequently in 2022 and 2023 there is a positive trend. Therefore, the trend suggests a
resilient economy with periods of growth interrupted by occasional fluctuations, this is due to
different internal and external factors that most economies face.

4.2.3 Import Value

The average mean of imports is 474234.6208. The standard deviation is 97939.19445 and
extends from a minimum of 321466.60 to a maximum of 659052.30.

Chart Title
700000

600000

500000

400000

300000

200000

100000

0
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
2015 2016 2017 2018 2019 2020 2021 2022 2023

Figure 4.3: Import Value

Source: Researchers, 2024

There is an upward growth of imports over the years with evident fluctuations over the years.
There is a fall of imports from 2015 to 2016 followed by an increase from 2017 to 2019
which is a negative trend. In 2020, there is a great decline in imports which was propelled by
the Covid-19 pandemic. From 2021 to 2023, there is increased level of imports as the
economy experienced recovery. Overally, the levels of imports have been increasing over the
years which is not a positive trend.
4.2.3 Value of Trade

The average mean of value of trade is 5924600361111.11. The standard deviation is

2303633519832.48 and extends from a minimum of 51305.6 to a maximum of 917917.3.

Volume of trade
10000000000000
9000000000000
8000000000000
7000000000000
6000000000000
5000000000000
4000000000000
3000000000000
2000000000000
1000000000000
0
ar
ye

Volume of trade

Figure 4.4: Volume of Trade

Source: Researchers, 2024

The trend of the value of trade is seen to be greatly fluctuating from 2015 to 2018, there is an
increase in 2019 through 2020 with less fluctuations observed. A slight drop in 2020
followed by a continuous increase with minor fluctuations upto 2023. This trend shows that
there is growth of value of trade but at a slower rate and this is contributed by the high levels
of exports.

4.3 Diagnostic Tests

Diagnostic tests were done before handling the regression model. Normality, multi-
collinearity and autocorrelation tests were conducted.

4.3.1 Normality Test

To ascertain if the data is normally distributed, we tested for Skewness. Skewness results are
considered to be normally distributed if the test statistic falls between -2 and +2. Table 4.2
shows that the variables have a skewness statistic that is between -2 and +2. Therefore, this
data was fit to be subjected to tests and analysis.

4.6.1 Influence of exports on economic growth

 Exports have no effect on economic growth as shown by the model coefficients (p =0.204 >
0.05)

According to absolute advantage theory, two countries can benefit by specializing in the
production of commodities that have absolute strength in and importing commodities that
have absolute weaknesses in. It provides an explanation that a country can export certain
goods because that country can produce goods at a lower cost compared to other countries or
can be said to have an absolute advantage in producing goods (Marbun, 2015).

In a study about international trade, exports and economic growth in selected Eurasia
Economic Union countries Kılıç, et al (2017), it had been determined that there is bi-
directional causality from growth to export and unidirectional causality from growth to
import. A study done shows exports were consistently positively related to growth, thus
confirming the hypothesis of trade having a significant positive impact on economic growth
in ECOWAS countries (Iyoha, et al ; 2017). Findings from Maina, R. M. (2015) revealed that
exports led to economic growth. There was a strong positive or direct relationship between
the exports and the economic growth. However, the correlation coefficient exports and
economic growth compared to the correlation between the imports and economic growth was
slightly small. A study by (Abdullahi, et al ; 2016) concluded that exports impact positively
on economic growth of the region and recommended that West African countries should
encourage indigenous enterprise for export promotion and import substitution. Results
revealed by Ali, D. M. (2023) show that export is negatively related to the gross domestic
product (GDP) and is statistically insignificant. To boost exports, Kenya must continue its
bilateral, regional, and international trade activities; offer technical and funding provisions to
micro, small, and medium-sized initiatives in value chains and companies manufacturing the
identified talented export goods; and support the progress of market- and product-specific
initiatives.

4.6.2 Influence of Exports on Economic Growth

Exports have no effect on economic growth as shown by the model coefficients

(p=0.035>0.05).

According to Comparative Advantage Theory, a country should specialize in production of

commodities with which it has a greater efficiency in. A country that is less efficient in
producing both commodities efficiently compared to other countries, the country can still
carry out mutually beneficial trade. This can be done when a country that is less sufficient in
producing both commodities specializes in producing the commodities with the smallest
absolute loss that is, has a comparative advantage and import commodities with a
comparative weakness.

A study by Erkişi, K. (2019). On effects of International trade on economic growth support

the feedback hypothesis, which argues bi-directional causality. International trade may seem
necessary for sustainable growth in the long-term based on outcomes of PMG Estimator, it
can be said that a structural transformation is necessary to eliminate import dependency in the
short term. Lawal, E. O., & Ezeuchenne, K. (2017). International trade and economic growth
in Nigeria. The result showed that there is a long run relationship between international trade
and economic growth, import and trade openness are both insignificant in the short run but
significant in the long run while export and balance of trade are significant in both the short
and long run. The granger causality test showed that economic growth is independent of
imports, exports and balance of trade but economic growth is unidirectional with trade
openness. Therefore, the study recommends that government should increase its exploration
of finished goods and reduce importation of finished goods to increase economic growth. A
study by Kılıç, N. Ö., & Beşer, M. (2017). Relationship between the variables had been
analysed with the panel causality test developed by Konya (2006). It had been determined
that there is bi-directional causality from growth to export and unidirectional causality from
growth to import. Zahonogo, P. (2016). Trade and economic growth in developing countries
Our findings are promising and support the view that the relation between trade openness and
economic growth is not linear for SSA. Accordingly, SSA countries must have more effective
trade openness, particularly by productively controlling import levels, in order to boost their
economic growth through international trade. A study by Gokmenoglu, K. K., Amin, M. Y.,
& Taspinar, N. (2015). on International trade, their analysis confirms that there is a long run
relationship among international trade, financial development and economic growth. The
results indicate that international trade and financial development spur economic growth in
Pakistan. Caleb, G., Mazanai, M., & Dhoro, N. L. (2014). Relationship between international
trade and economic growth. The results of the study indicate that trade and economic growth
are cointegrated, but the relationship is strengthened by the stability of the macroeconomic
policy since negative macroeconomic drivers such as rising inflation can constrain economic
growth. Openness to trade is also deemed to play a crucial role, where reduction and
elimination of barriers to trade promote growth in trade and ultimately economic growth.
 CHAPTER FIVE

5.1 Introduction

The major motive of this study was to investigate the way international trade influences the
economic growth of Kenya. The findings from the above sections are outlined in this chapter
together with the conclusions and limitations of this study. This section also outlines the
recommendations that can be adopted by policymakers. It also outlines the areas for further
research.

5.2 Summary of Findings

The study assessed how international trade affects economic growth in Kenya. Exports,
Imports and Entrepot were adopted to be the predictor variables of the research. The study
used descriptive research design to do analysis and data collection. Secondary data was
obtained from the Kenya National Bureau of Statistics and analysed using IBM SPSS
Statistics 27. The study used quarterly data for nine years. The findings revealed a positive
relationship that is statistically significant between Real GDP growth and Imports. Further,
the findings revealed that there is a negative relationship that is statistically insignificant
between real GDP growth and Exports, and there is a negative correlation between that is
statistically insignificant between Real GDP growth and Entrepot.

The R squared coefficient of 0.177 indicates that the selected explanatory variables can only
explain 17.7 % of the variation of economic growth in Kenya, the remaining 82.3%
represents all other factors not included in this research. ANOVA shows that the F-statistic
with p=2.298 is insignificant at 95% confidence interval demonstrating that the model could
not capture the independent variables’ effect on economic growth in Kenya.

5.3 Conclusions

The findings of this study suggest that while International trade measures such as Export,
Import and Entrepot have some association with economic growth in Kenya, their impact is
not statistically significant in isolation. However, the model’s limited explanatory ability and
the presence of the unaccounted factors indicate that further research is necessary to fully
understand the dynamics of international trade and its relationship with economic growth in
Kenya. The study concludes that selected predictor variables affect economic growth by
17.7% of variations in the model. This suggests that within the parameters of the study, there
is no enough evidence to conclude that these international trade tools have a significant
impact on economic growth in Kenya.

5.4 Recommendations

Based on the above discussion and research findings, we conclude that the research has
achieved the objective of determining the effects of international trade on Kenya’s economic
growth.
The study revealed an insignificant effect of Export and Entrepot on Economic Growth in
Kenya. The research recommends the need for policy makers to create a conducive
environment for International traders to enhance Exports and Entrepot as this will enhance
economic growth.

The study revealed a significant association between imports and economic growth in Kenya.
The government needs to stabilize and reduce on imports in order to maintain this.
Policymakers should continue to monitor economic indicators closely and adopt a holistic
approach to policy-making. They should focus on implementing policies that promote overall
economic stability, sustainable growth taking into account the multifaced nature of economic
dynamics. The research also recommends that policy makers should pursue policies that
encourage lower imports and higher exports.

5.5 Suggestions for Further Research

Research that focuses on primary data or a mix of both primary and secondary data is
recommended so as to recognize qualitative elements that might have been overlooked in this
research. A qualitative research is to complement this research.

A research should be conducted to include other variables of international trade such as

balance of payment, Terms of Trade and on how each of them affects economic growth as
this will enable policymakers to decide on the steps to take to enhance economic growth.

This study focused on the last nine years. Other studies should employ a wider range so as to
come up with a better conclusion. Additional surveys could be conducted in other nations to
determine different results. Future studies could employ other methods apart from regression
model to confirm or reject their hypotheses.