Volume 4, Issue 1, March 2019, Page: 31-37
Firm Characteristics and Export Intensity in Kenyan Manufacturing Firms: An Empirical Analysis
Kipkurui Josphat Kipsaat, School of Economics, University of Nairobi, Nairobi, Kenya
Received: Feb. 21, 2019;       Accepted: Apr. 8, 2019;       Published: May 20, 2019
DOI: 10.11648/j.jbed.20190401.15      View  520      Downloads  110
This paper examines the determinants of export intensity in Kenyan manufacturing firms. We use data from the World Bank enterprise survey 2013 and from it examine how firm characteristics explain export intensity. We use the Ordinary Least Squares estimation technique and Heckman sample selection model to estimate this relationship. The Heckman model is estimated in order to control for possible Sample Selection bias as export intensity is only observable in firms that make the decision to export. The findings show that innovation and certification are major determinants to export intensity as a unit change in these variables would result to a change in export intensity by 0.4747 units and 0.3259 respectively. Foreign firms are also found to export more as compared to domestic firms; the results show that the foreign owned firms export 0.5803 more units than domestic firms. This paper recommends that Kenyan firms should adopt internationally recognized certification standards in order for them to be more competitive in the international market and should embrace innovation by introducing new products and making improvements to their existing products; this can be achieved by investing more in research and development. These measures will increase firm export intensity leading to an overall increase in the country’s volume of exports leading to an improved balance of trade, a significant factor to overall economic growth. This paper therefore provides valuable information on how Kenyan manufacturing firms can increase the proportion of revenue received from engaging in international trade.
Export Intensity, Export Propensity, Firm Performance
To cite this article
Kipkurui Josphat Kipsaat, Firm Characteristics and Export Intensity in Kenyan Manufacturing Firms: An Empirical Analysis, Journal of Business and Economic Development. Vol. 4, No. 1, 2019, pp. 31-37. doi: 10.11648/j.jbed.20190401.15
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abala, D. O. (2013). Export propensity and intensity of Kenyan manufacturing firms: An empirical analysis. Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB), 2(2), 638-654.
Bernard, A. B., & Jensen, J. B. (2004). Why some firms export. Review of economics and Statistics, 86(2), 561-569.
Bhavani, T. A., & Tendulkar, S. D. (2001). Determinants of firm-level export performance: a case study of Indian textile garments and apparel industry. Journal of International Trade & Economic Development, 10(1), 65-92.
Bivens, J. (2003). Updated Employment multipliers for the US Economy (2003). Economic Policy Institute. Washington DC.
Castellani, D. (2002). Export behavior and productivity growth: Evidence from Italian manufacturing firms. Weltwirtschaftliches Archiv, 138(4), 605-628.
Chetty, S. K., & Hamilton, R. T. (1993). Firm-level determinants of export performance: a meta-analysis. International Marketing Review, 10(3).
Din, M., Ghani, E., & Mahmood, T. (2009). Determinants of export performance of Pakistan: evidence from the firm-level data. The Pakistan Development Review, 227-240.
Farinas, J. C., & Martín‐Marcos, A. (2007). Exporting and economic performance: firm‐level evidence of Spanish manufacturing. World Economy, 30(4), 618-646.
Fonchamnyo, D. C. (2014). Determinants of export propensity and intensity of manufacturing firms in Cameroon: an empirical assessment. Applied Economics and Finance, 1(2), 30-36.
Giles, J., & Williams, C. L. (2000). Export-led growth: a survey of the empirical literature and some non-causality results. Part 1. The Journal of International Trade & Economic Development, 9(3), 261-337.
Heckman, J. J. (1976). The common structure of statistical models of truncation, sample selection and limited dependent variables and a simple estimator for such models. In Annals of Economic and Social Measurement, Volume 5, number 4 (pp. 475-492).
Heckman, J. J. (1979), “Sample Selection as a Specification Error,” Econometrica, 47, 153-161.
Hiep, N., & Nishijima, S. (2009). Export intensity and impacts from firm characteristics, domestic competition and domestic constraints in Vietnam: A micro-data analysis (No. 238).
Iyer, K. (2010). The Determinants of Firm-Level Export Intensity in New Zealand Agriculture and Forestry1, 2. Economic analysis and Policy, 40(1), 75-86.
KIPPRA. (2017). Kenya Economic Report 2017. Nairobi: KIPPRA.
Kenya Association of Manufacturers. (2018). Manufacturing Priority Agenda, 2018. Nairobi: kenya Association of Manufacturers.
Kenya National Bureau of Statistics. (2017). Economic Survey 2017. Nairobi: Government Printer.
Laursen, K. (2008). The effect of knowledge sources for export performance in manufacturing and services: Danish firm-level evidence. Copenhagen Business School.
Lawless, M., & Whelan, K. (2008). Where do firms export, how much, and why? (No. 08/21). Working Paper Series.
Lucas, S. (2017). The impact of demographic and social factors on firm performance in Kenya. Journal of Business and Economic Development, 2(4), 255-261.
Masakure, O., Henson, S., & Cranfield, J. (2009). Standards and export performance in developing countries: Evidence from Pakistan. The Journal of International Trade & Economic Development, 18(3), 395-419.
Medina-Smith, E. J., & CNUCED. (2001). Is the export-led growth hypothesis valid for developing countries? A case study of Costa Rica. CNUCED: UN.
Mohan, R., & Nandwa, B. (2007). Testing Export-led Growth Hypothesis in Kenya: an ADRL bounds test approach.
Muhoro, G., & Otieno, M. (2014). Export led growth hypothesis: Evidence from Kenya. Journal of World Economic Research, 3(4), 37-46.
Ngumi, M. P. (2009). Exports and economic growth: the case for Kenya. MA Research paper, University of Nairobi. Watson. PL (2001). “Export Processing zones”, Africa region working paper series, (17).
Osunsan, O. K., Nowak, J., Mabonga, E., Pule, S., Kibirige, A. R., & Baliruno, J. B. (2015). Firm age and performance in Kampala, Uganda: A selection of small business enterprises. International Journal of Academic Research in Business and Social Sciences, 5(4), 364-374.
Roberts, M. J., & Tybout, J. R. (1997). The decision to export in Colombia: an empirical model of entry with sunk costs. The American Economic Review, 545-564.
Rodrik, D. (2007). The real exchange rate and economic growth: theory and evidence. Harvard University.
UNCTAD. (2016). General Profile: Kenya. Available at http://unctadstat.unctad.org/CountryProfile/GeneralProfile/en-GB/404/index.html
Vision 2030 (2007). A globally competitive and prosperous Kenya. Government Printers.
Wignaraja, G. (2008). Foreign ownership, technological capabilities and clothing exports in Sri Lanka. Journal of Asian Economics, 19(1), 29-39.
Were, M., & KIPPRA, K. (2006, December). Export-Orientation and Employment Patterns in Kenya’s Manufacturing Sector: Firm-Level Evidence. In Draft for presentation at the CSAE conference.
World Bank. ( 2012). Kenya Exports Performance Overview. Washington D. C: The World Bank.
World Bank. (1993). The East Asian Miracle. Oxford University Press. Washington D. C.
WTO. (2016). Kenya Merchandise Trade.
http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx? Country=KE&Language
Yoshino, Y. (2008). Domestic constraints, firm characteristics, and geographical diversification of firm-level manufacturing exports in Africa. The World Bank.
Browse journals by subject