02/04/13 Ishan Dutt Politics 178 Spring 2013 Introduction The Republic of Kenya is a semi-presidential republic in East Africa

with a population of 44 million (2013 estimate). Kenya was brought under British colonial rule in 1895 with the establishment of the East African Protectorate, which later became the Kenya Colony in 1920. It achieved independence in 1963, which represents the beginning of the period for which this paper aims to evaluate its developmental history in light of a number of theories. Kenya is currently classified as a low-income country by the World Bank, with a per capita nominal GDP of US$808 (2011 estimate). This paper aims to analyze Kenya’s developmental history, current situation and future prospects in light of four main development theories: the impact of colonialism, dependency theory, cultural explanations and the resource curse. Historical Growth and Development Indicators

The following graph presents Kenya’s per-capita GPD growth for the period 1960-2012.

Fig 1: Per-capita GDP (1960-2012)

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total (years) Mortality rate. an intergovernmental organization that promotes economic cooperation.The initial years after independence are often referred to as Kenya’s “Golden Years”. with the main threat to stability being identified as political instability such as the election violence seen in 2007-08 (World Bank Kenya Economic Update 2012). most notably the onset of the global oil crisis. adult total KENYA $808 57 73 87% BURUNDI $271 50 139 67% TANZANIA $532 58 68 73% RWANDA $583 55 54 71% UGANDA $487 54 90 73% Table 1: Regional comparison on development indicators 2 . Further summary statistics related to developmental indicators are presented in the table below. volatility in the prices of its exports and increasing national debt. Kenya is in a favorable position. which also provides a regional comparison with countries that are part of the East African Community. which coincided with heavy droughts. By the start of the 1980s. the following two decades have been characterized by strong growth. its health indicators lie roughly at the average within the group. From the 1970s to the 1990s however. Although there has been disagreement about attributing it directly to the SAPs. Kenya implementing structural adjustment programs (SAPs). GDP per capita (current US$) Life expectancy at birth. international trade policy and the civil service (Rono 2002). which involved liberalizing markets and reforming the financial sector.000 live births) Literacy rate. particularly in terms of GDP per capita and literacy rates. under-5 (per 1. Kenya was faced with significant setbacks. with regard to its neighbors. as they represented a period of sustained economic growth. Despite this. As the statistics show.

The most notable post-independence barrier to development that emerged from Kenya’s colonial legacy proposed by Fahnbulleh (2006) is ‘colonial underdevelopment’.The Colonial Legacy The presence of British colonialism in Kenya for close to 70 years has had a significant impact on the nation’s post independence development. colonial policies such as the tax burden imposed on all males between the ages of 15 and 40 allowed for additional resource extraction while ensuring a steady supply of cheap wage labor. It is also important to note that Kenya was one of just a few British colonies in Africa that exhibited this form of colonialism. The forcible removal of locals. ownership and economic participation on the part of Kenyans in favor of their own settlers. coffee and pyrethrum. British rule in Kenya was characterized by a blend of mercantilism and liberalism– indirect settler colonialism. The most striking evidence for the mercantilist identification is related to the nature of state regulations that were imposed. The argument for colonial underdevelopment stems from the failure of the British to make investments in infrastructure beyond what was 3 . Under the framework of Mahoney’s (2010) analysis of colonial and post-colonial development. This characteristic lends itself to Mahoney’s argument that higher levels of mercantilist colonial involvement can serve to inhibit development. particularly from the agricultural highland areas ensured that colonial settlers could derive the vast majority of agricultural benefits from growing and exporting tea. The United Kingdom imposed heavy restrictions on trade. Furthermore. Nevertheless. In fact. 90% of exports of these three products came from colonial plantations (Wolff 1970). it is the mercantilist aspects of British colonialism that seem to have had the greatest effect on Kenya’s postcolonial development. which may help account for some of the deviations in its post-independence development trajectory.

However. Kenya cannot avoid the penetration of foreign capital into its economy. Although over time independent Kenya did make significant investments in infrastructure and human capital. This is. but is driven by foreign investment in modern sectors such as manufacturing. it seems clear that certain aspects of British colonialism burdened the country with considerable developmental handicaps. Kenya’s developmental history exhibits an evolution towards “developmental dependence” (Bradshaw 1988) in which economic growth is sustained. The dearth of these capacities that Kenya’s post-independence labor force inherited fed directly into the country’s most significant economic problem in the 1960s and ‘70s: severe unemployment. Classical dependency tends to generate an outcome in which developing countries face developmental stagnation due to foreign extraction of raw materials. As a developing nation participating in the global capitalist system. 4 . This put into place a post-independence reliance on agro-production that played a part in stalling Kenyan development during the 1970s through the volatility in prices for global commodities. which empowers certain groups of elites at the expense of those engaged in other sectors.required to extract agricultural products for export. a case of the classical dependency theory outlined by Chilcote. in essence. Thus. the discriminatory labor practices and forced displacement of locals put in place during colonial times made both financial and human capital accumulation on the part of Kenyans incredibly difficult. Dependency Theory Despite the end of formal colonialism in Kenya. its post-independence development has been heavily affected by external political and economic influences. Additionally. dependency has had an overall positive effect on Kenya’s development but has led to uneven outcomes as evidenced by growing income inequality.

This has been seen as evidence of exploitation of Kenya’s liberal profit repatriation and foreign investment protection laws by MNCs. Even though developmental dependence is preferable to the damaging effects of classical dependency. which in turn have benefitted certain groups of Kenyan capital holders have enjoyed favoritism by the government. it played an important role in the development of a Kenyan middle-class while also contributing to overall economic growth. Apart from multinational corporations. Kenya has promoted an economic climate that has induced foreign investment. particularly from multinational corporations (MNCs) that direct capital towards the manufacturing sector. Bradshaw’s empirical analysis found the foreign investment had a statistically and economically significant effect on total output and particularly on manufacturing output over a 20 year period in Kenya. The government has historically generated significant tax revenues (47. Unfortunately.Throughout its post independence period. usually at rates that exceed capital inflows. The guarantee of profit expatriation and pledges not to nationalize foreign assets ensured a steadily increasing inflow of foreign investment throughout the years following independence. the paradigm of developmental dependence seen in Kenya has played a major role in exacerbating the problem of income inequality that has persisted 5 . the Kenyan government and local capital created unequal outcomes in favor of a small section of the population. the clearest beneficiaries under the framework of developmental dependency are the Kenyan government and groups of elites who are awarded joint ventures and investment opportunities.5 % of repatriated profits). it is clear that the high returns to foreign investment in Kenya represent overall wealth extraction. These tax revenues have been a major force in increasing public sector participation in the Kenyan economy. the associated time period has also seen significant outflows of international investment income. Although this three-way relationship between foreign capital. Despite its overall benefits.

6 ." 2010 Corruption Perceptions Index. The two groups that were most heavily associated with these wealth holdings were owners of large-scale enterprises and high-level formal sector employees.51. 2013. suggesting that income inequality continues to remain an important issue in promoting development. Although the Kenyan example has generally been incongruent with classical dependency theory in that overall economic growth was not adversely affected by foreign capital.8% of total national income. the most significant corruption-related barrier to development in recent years has been election fraud and lack of government transparency. which places it 48th in global rankings.. N. 02 Apr. 02 Apr. During the time of Bradshaw’s analysis in the 1970s. Web. Although there are deleterious effects of corruption through the extraction of rents (the average urban Kenyan pays an average of 16 bribes per month). Kenya currently ranks 154th out of 178 countries on Transparency International’s Corruption Perception Index2. n. One of the most significant underlying factors that contribute to this rampant corruption is the importance placed by public and private sector officials on ethnic or tribal background. Web. 1 2 "Central Intelligence Agency. n. 2013. the top 10% of households accounted for 45. Ethnicity and Corruption Throughout its history as an independent republic. both of which gained the most from the inflow of foreign capital due to the Kenyan government’s allocation of joint enterprises and local distribution rights.. "Corruption Perceptions Index 2010 View Country Results. Kenya currently has a GINI coefficient of 42. N.p. Culture.d. Kenya has been plagued by high levels of both petty and grand corruption. it does fit the pattern of exclusive benefits being accrued by certain groups of privileged elites.d." Welcome to the CIA Web Site —.p.since independence.

has been identified by the World Bank as one of the most significant potential barriers to Kenya’s future development. n. N. The intrinsic link between ethnicity and politics came to fore following the disputes over the outcome of the 2008 election. the high level of violence had a detrimental effect on the economy that year: the GDP growth rate in 2008 was 1.bloomberg. Unsurprisingly.com/news/2010-09-24/kenya-still-plagued-by-corruption-ethnic-tensions-may-risesays-githongo. Although developmental theories based on culture often fail to provide powerful explanations. down from 7. Kenya’s deeply embedded cultures of ethnic divide and corruption have proven to be obstacles to development and stability throughout its history. 2013.000 people. corruption places a burden on development not only through rent extraction but through its reinforcement of political division and infighting." Think Africa Press. The Resource Curse 3 4 "Kenya's Coalitions of Convenience and Ethnic Politicking.p.Election related shocks.7%. as a failure to clamp down on corruption and reduce ethnic violence could reverse much of the progress that has been made. Voting along ethnic lines is a widely documented phenomenon in Kenya and is heavily based on the assumption that the election of a member of one’s community will result in benefits being directed back to the people of that community3.1% the year before4. Clashes between the Kikuyu community and both the Kalenjin and Luo communities resulted in around 1500 deaths and the displacement of close to 300.html 7 . given the significant developmental gains made during the 1990’s and early 2000’s. such as the violence that followed fraud allegations in 2008. Because the benefits of political representation are so fundamentally linked with ethnicity.d.. 02 Apr. Web. http://www. The fact that these problems seem to have been exacerbated in recent times is especially troubling.

and given the severely adverse affects of the 1970’s energy crisis on the Kenyan economy. The opportunity for energy self-sustainability would also be a massive boost to the Kenyan economy." .6 trillion dollars. Despite these benefits. 8 . pyrethrum and flowers) has formed the backbone of the Kenyan economy.d. the presence of massive oil wealth could also easily lead to an exacerbation of the existing developmental problems faced by Kenya. which would make it the world’s 13th largest oil producer5. there is a good chance that Kenya may fall into the trap of Ross’ oil curse.Africa. especially given its high 5 "Kenya Oil. N.p. Web. n. being able to man age its own energy sources will help ensure some degree of economic stability.Although the extraction and exportation of agricultural goods (particularly tea. With such huge potential for wealth accumulation that could be invested into development projects. Based on Kenya’s poor track record with regard to corruption and rent extraction. the recent discovery of oil reserves in the northern Turkana region pose an interesting question for how effectively Kenya will be able to direct the significant economic gains towards its developmental goals. Gas Investment on Hold. which represents more than 60 times Kenya’s total GDP in 2012. who estimate that there are around 23 billion barrels of oil beneath Kenyan soil. the management of these oil reserves and the profits they generate is likely to be one of the most important public policy issues in the coming years. Kenya’s oil reserves were discovered in March 2012 by a UK-based oil company. 2013. While Kenya did suffer from price volatility in commodities markets during the 1970’s. 02 Apr. these reserves would be worth some $2. Oil imports accounted for 22% of total imports in 2010. it has generally managed to avoid the negative economic effects of overreliance on the export of a few raw materials. coffee. these natural resources to not fit into the model of the resource curse outlined by Ross (2012). However. Based on current oil prices..

Secondly. While this may be seen as an opportunity for Kenyan companies to take on infrastructure projects. A final consideration in the development of an oil sector is the ‘Dutch Disease’ . whereby a natural resource boom adversely affects a country’s manufacturing and agricultural sectors. Ross’ analysis of the three channels through which government claims to oil revenues have detrimental effects on the private sector are aligned with the fears that development officials hold with regard to Kenya’s future as an oil producer. While the “resource movement effect” may be minimal given the limited impact that the oil 9 . which is problematic not only because of its economic isolation. it is unlikely that Kenya’s oil p roduction will provide large benefits to groups apart from foreign investors and local industrial elites. governmental acquisition of oil revenues increases the size of the government relative to the overall economy and also reduces its dependence on taxes. a further reduction in accountability to the general populous is likely to generate unequal economic outcomes from oil revenues. Indeed. Under Ross’ framework. Ross points out the infrequency with which oil producers buy inputs from local firms. but also because there is a severe lack of infrastructure for oil extraction. Ross identifies the “enclave” nature of oil projects – the fact that they are geographically and economically isolated from the rest of the country and so are unlikely to stimulate growth in other parts of the economy. as well as the recent monopolization of infrastructure projects by foreigners (particularly China). The first and most obvious reason is that government ownership over oil assets by definition prevents private companies from being enriched by petroleum extraction. in light of the arguments made for Kenya’s development dependency framework. and thus lessens its accountability to the population. In a country where political and economic benefits are already distributed along ethnic lines that benefit small groups of elites. Kenya’s oil reserves are located in the remote region of Turkana.levels of corruption.

p. 6 "The Kenyan Oil Discovery: Is A Big Payday In The Offing?" International Business Times. 2013. 10 . This would have a two-fold effect on other sectors of the economy: 1) the price of Kenyan exports would be relatively higher in the international market and 2) it will be cheaper for Kenya to import manufacturing and agricultural goods rather than to produce them domestically. in both its history and its potential future trajectory. albeit unequal.sector tends to have on local labor and capital. provides fascinating and useful insights into the real-world applicability of a number of development theories. although the specific details provide some nuances to the core models. Colonialism in Kenya can be characterized as a hybrid of Mahoney’s mercantilist and liberal models that had detrimental but not insurmountable effects on development. Pratiba Thakar. the “spending effect” is likely to play a role in shaping the future of Kenya’s economy.. growth. especially given the turbulence they have caused in recent elections. Web. The discovery of huge oil reserves also presents a challenge depending on how effectively its benefits can be managed to promote development for the overall population rather than just for a handful of elites. n. Kenya’s dependency on the global capitalist system has also evolved from a classical model to a developmental model that has promoted positive.d. 02 Apr. The post-independence trends in Kenya’s GDP growth lend some credibility to the theories of colonial legacies and dependency. Concluding Remarks Kenya’s development. N. the regional director of the Economist Intelligence Unit in Africa points out that one of the major effects of Kenya generating oil revenues will be a strengthening of the Kenyan shilling6. Kenya’s rampant culture of corruption and ethnic political division present formidable challenges to future development. Looking to the future.

2012. State. The Tasks of Economic History (Mar. (2002). Rono. Print. Princeton. 1988). 17. 33-47 Mahoney.Sources    Bradshaw Y. Reassessing Economic Dependency and Uneven Development: The Kenyan Experience American Sociological Review . 1895 to 1930 The Journal of Economic History . 81-98. No. Cambridge: Cambridge UP. 33. Boulder. Fahnbulleh M. Vol. Impact of Social Adjustment Programmes on Kenyan Society. CO: Westview. Economic Aspects of British Colonialism in Kenya. 1984. Colonialism and Postcolonial Development: Spanish America in Comparative Perspective.. Wolff R. 30. pp.. Vol. 2006). NJ: Princeton UP. Michael Lewin. Ronald H. Theories of Development and Underdevelopment. 107. Class & Civil Society in Africa (Mar. No. 53. In Search of Economic Development in Kenya: Colonial Legacies & PostIndependence Realities Review of African Political Economy . Journal of Social Development in Africa. Vol.. No. Ross. 2010. 273-277     11 . pp. pp. James. Print. 1. Print. 1. The Oil Curse: How Petroleum Wealth Shapes the Development of Nations. J. K. 693-708 Chilcote. 1970). 5 (Oct.

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