Kenyan Economy in Details

  

Date Posted: 6/6/2018 11:55:15 AM

Posted By: Judiesiz  Membership Level: Gold  Total Points: 1872

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“ECONOMIST PERSPECTIVE”

As an economist what comes into your mind when a word economy is stated? According to the dictionary an economy is the state of a country or region in terms of the production and consumption of goods and services and the supply of money. Several economists such as Adam Smith, David Ricardo and other economists have discussed in details what an economy is and what it entails. Economy is universally understood as a social domain that emphasizes the practices, discourses, and material expressions associated with the production, use, and management of resources. There several types of economies which include market-based economy and command- based economy. A market-based economy is where goods and services are produced and exchanged according to demand and supply between participants (economic agents) by barter or a medium of exchange with a credit or debit value accepted within the network, such as a unit of currency y and command based economy. A command-based economy is where political agents directly control what is produced and how it is sold and distributed. An economic agent is an actor and more specifically a decision maker in a model of some aspect of the economy. Typically, every agent makes decisions by solving a well or ill-defined optimization or choice problem. Examples of economic agents include households, firms, businesses and individuals.

Kenya’s economy is market-based with a few state-owned infrastructure enterprises and maintains a liberalized external trade system. Sectors of the economy are primary sector, secondary sector, tertiary sector and quaternary sector. The primary sector includes agriculture, mining and other natural resource
sector industries; the secondary sector covers manufacturing, engineering and construction; a tertiary sector is for the service industries, the quaternary sector for intellectual activities involving education and research and the quandary sector reserved for high level decision makers in government

and industry

The Primary Sector

The primary sector in the Kenyan economy covers the largest proportional of the overall economy. With the agriculture is has really done well. Kenya is best known in the production of high quality tea and coffee especially in large quantities. The best quality tea is usually exported to the world markets such as United States and in many countries of Europe. This helps in improving balance of payments whereby it improves the level of exports hence fetching more foreign currency. In mining Kenya is coming up with many mining sites. Some of the minerals that are mined include fluorspar, salt, small deposits of gold, small deposits of copper, also there many other minerals that they have invented including titanium in southern part of Kenya and large deposits of oil in the northern part of Kenya. The oil which will be mined in this part will have positive effects to residents of these areas. Since the northern part of Kenya is so dry, this drilling of oil become the main in economic activity. The citizens in this area will be employed in these mining sites and this will improve their living standards. Also several businesses will mushroom in a very short period of time. Also the drilling of oil will have positive consequences to the country as a whole. When the oil is exported, it will earn foreign exchange to the country. The level of exports will be improved which may lead to surplus balance of payments. The foreign currency will be used to enhance development of the country.

The Secondary Sector

The secondary sector which involves manufacturing, processing, engineering and construction is not well developed in Kenya. In manufacturing, several infant industries have been developed in the recent past. The cheap imports usually paralyses the development of these industries. The citizens will opt to buy these cheap imports and leave the goods produced locally hence these industries will not make large profits to improve their development and production. An example is where due to cheap prices of "mitumba", the textile industries has collapsed in Kenya. The tea and coffee produced in Kenya is usually export when raw. The same coffee and tea is usually processed and we import it at high prices. In my view if the products were processed locally then we would have exported at high prices and this would discourage balance of payment deficit whereby the imports exceeds exports. Some of the policies made by the government are quite encouraging. The setting up of Export Processing Zones has helped the economy to improve on the manufacturing sector. The Export Processing Zones have increased thee goods manufactured locally and this will discourage the importation of such products. The Export Processing Zone has also increased the employment opportunities in Kenya. This has improved the living standards of those workers. The government has also been able to fetch revenue via payment of taxes by the workers and also from the goods produced.

The Tertiary Sector

This sector involves service provision. Kenya is one of the best countries in East Africa in service industry. It has a well equipped banking and telecommunication sector. Some of the banks in Kenya have their branches out of the country. For the telecommunication, some of the telecommunication companies such as Safaricom have improved at high level in this area. The improvement has been reached due to the high level of competition with other firms such as Telkom, Equitel and Airtel which try to penetrate into the market. These firms have also set up branches in other countries so as to cover a large market.

Quaternary sector

This sector includes the intellectual activities such as education and research activities. The government has been able to improve in education whereby it offers free primary education and subsidized secondary education. It has also been able to improve in tertiary education whereby it has search for scholarships for Kenyan students to study abroad. According to economics, education and training helps in improving the human capital which is very crucial in any activity. Human capital is the skills required to carry out any economic activity with ease. Research has helped in improvements in many economic activities. The research can be used to explore any problem and the experts in that field can come up with several policies to cover up the problem. The research is usually carried by the economists who collect data, analyses it using statistical programs such as STATA and SPSS, interpret it and present it using tables, graphs and charts. By carrying all these activities they are able to know the cause of the problem and the solution to the problem.

In 1960s Kenyan economy was at par with than of Asian Tigers such Taiwan, Singapore , South Korea and Hong Kong. In today the economies has improved at a higher rate than that of Kenya. To some extent the Kenyan government even seeks for financial aid from these countries. What affected the Kenyan economy so as not to be at par today when economy is concerned? In my view corruption in Kenya has caused many problems such as discouraging developed which has in turn led to slow development of the economy.

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