| dc.description.abstract | Agricultural exports are key drivers of the Kenyan Economy. They contribute significantly to
foreign exchange earnings, job creation, and economic growth. Kenya’s Vision 2030
highlighted agriculture as a crucial economic pillar that will spur its achievement. However,
there has been reduced profitability and an increased uncertainty of producing for export leading
to poor performance of Kenya’s agricultural exports. Even though there are a lot of studies on
Kenya's agricultural industry, very few of these studies specifically address the country's
agricultural exports. This study looked at the effect of capital formation, inflation, and currency
exchange rates on the performance of agricultural exports. The general objective examined the
effect of macroeconomic determinants on the performance of agricultural exports in Kenya. The
study’s distinctive goals entailed: determining the effect of capital formation on the
performance of agricultural exports in Kenya, establishing the effect of inflation on the
performance of agricultural exports in Kenya, and investigating the effect of the currency
exchange rate on the performance of agricultural exports in Kenya. This research was anchored
on traditional trade theory. It used a causal research design to examine the relationship between
variables, using annual secondary time series data from the World Bank. Data analysis was
done using EVIEWS software version 10 for descriptive statistics, correlational, and multiple
regression analysis. The results of a Correlation analysis revealed positive correlations between
the agricultural export performance and capital formation (0.6631), and the Currency exchange
rate (0.7853), but a negative relation for the case of inflation (-0.2959). ADF test revealed
integrated levels at I(0) and I(1), and the F-Bounds tests showed the absence of a long-term
relationship among variables. The outcome of a multiple regression analysis revealed that
capital formation and currency exchange rate had significant positive effects on agricultural
export performance while, inflation had a negative significant effect, with coefficients of
0.4848, 0.3983, and -0.2817, in that order at a 5% significance level. The data was normally
distributed, the independent variables were not correlated, and the regression residuals were
homoscedastic and not serially autocorrelated according to the post-estimation diagnostic tests.
Drawing from the empirical findings, the study recommends implementing robust inflation
management policies to stabilize prices and lessen the adverse effects of inflation on agricultural
exports. Additionally, the government should introduce policies to ensure a competitive
exchange rate. The study further suggests that additional research be conducted to assess the
impact of macroeconomic factors, including Gross Domestic Product, Foreign Direct
Investments, and Unemployment, on the performance of Kenya's agricultural exports. | en_US |
