Role of foreign direct investment on technology transfer and economic growth in Kenya: a case of the energy sector

Abstract

Foreign firms in Kenya have played a major role in enhancing economic growth in the agriculture sector, especially in floriculture and horticulture. Over a long period of time, foreign direct investment (FDI) has been found to create many externalities in the Kenyan economy in the form of benefits available through transfers of general knowledge, specific technologies in production and distribution, industrial upgrading, work experience for the labor force and the establishment of finance-related and trading networks, and the upgrading of telecommunications services. The purpose of this study was to address the role of foreign direct investment on technology transfer and economic growth in Kenya, with a focus on the energy sector in Nairobi focusing on the period between 2001 and 2014. This study adopted a descriptive and inferential survey design. The target population for this study was 60 senior managers composing of directors and managers from Kenya Power and Kengen. Questionnaires were used to collect primary data. The study established that there is a relationship between foreign direct investment variables of infrastructure, technology diffusion, trade facilitation, knowledge management, and technology transfer and economic growth. The study found that investment in the energy sector has led to new technology in the country as it has transferred technology to local investors through sharing of knowledge in new innovation in production, research, and development and also has led to increased competition in trading which has resulted in efficiency and effectiveness of the industry. A major implication of this study is that policy makers must devise policies that would create an enabling environment for attracting FDIs in order to facilitate technology transfer and hence economic growth.

The Impact of Innovation on the Firm Performance and Corporate Social Responsibility of Vietnamese Manufacturing Firms

“…In a developing context, resources for R&D research, such as financing and human capital, are considerably limited. External sources such as FDI and through external collaboration are important, and aid much in firms' innovation [9]. Therefore, openness in innovation is critical and is expected to bring desirable outcomes, and help firms to improve in general.…”

“…Much as literature has incorporated several dimensions of open innovation (e.g., breadth, depth), little has been done in examining the impact of the interaction between external collaboration and process and product innovation on firm performance, at least in a developing country setting. A study of the effect of open innovation for manufacturing firms in developing countries is warranted since, compared to counterparts in more developed markets, innovation in firms in developing countries tends to be more determined by foreign direct investment (FDI) and external technology transfer, rather than by built-in capacity or domestic R&D expenditure [9].…”

“…Another contribution of the present paper is the study of the influence of product and process innovations in a vacuum, and of whether external collaboration in the making of these two innovations is more beneficial than a closed process. A firm's resources for open innovation activities are particularly limited in developing markets, as these activities are costly yet unable to bring certain positive outcomes [9]. This is why an attempt to investigate the role of collaboration in product and process innovations is essential, both in academic and practical meanings.…”

The Shadow Economy, Human Development and Foreign Direct Investment Inflows

“…Journal of Competitiveness, 12(1), 5-21. https://doi.org/10.7441/joc.2020.01.01 petitiveness and economic growth. Therefore, FDI is often considered an important engine that accelerates economic progress through know-how transfer and technological diffusion, raising competitiveness (Hunya, 2001;Bezic & Karanikic, 2014;Osano & Koine, 2016), the provision of the essential capital (Benhame, 2012) and higher productivity (Tintin, 2010;Davidescu & Strat, 2015), in particular, in the countries with high absorptive capacities (e.g. with relatively open international trade and/or appropriate human resources) (Carbonell & Werner, 2018).…”

Technological innovation and competitive advantage in telecommunication companies in Kenya

“…Thus, from the initial two players, the entrance of other network operators has brought intense competition in the industry. Subsequently, the increasing competitive situation has led to price conflicts, which have led to the lowest prices in Africa (Osano & Koine, 2015). The firms therefore have needed to employ various innovative and competitive strategies to survive in the industry (David, 2019).…”