Foreign Investment and Technological Spillovers in Kenya: Extent and Mode of Occurrence

Abstract

This paper uses a uniquely designed analytical framework based on technological learning and capability development to examine the extent of multinational company spillover occurrence in the Kenyan manufacturing industry. Using a firm-level survey data, we examined the kind of spillovers occurring, extent of occurrence as well as the channels through which such spillovers occurred. The results obtained showed that the main kinds of spillovers occurring were product and process spillovers followed by marketing, management and organisation. Results of t-tests analysis showed significant differences between competition and demonstration, and linkage and labour mobility implying that the first two mechanisms were extremely important in spillover occurrence compared with the latter two in the Kenyan context. These have implications that linkage and labour mobility have weaker learning effects, hence weak in stimulating capability building. T-test analysis showed that more spillovers...