Market-Oriented Development Strategy for Kenya

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A Participatory Market-Oriented Strategy for Development in Kenya Kennesaw State University 19 Annual Economics Convention Mumbai, India December 16-17, 2011 Chris Blackburn, James Chapman, Kendrick Pulver, Shamir Virani, Jarret Yingling Advisors: Professor Murat Doral and Professor Michael Patrono th

Foreword Africa’s emergence into the global marketplace presents new challenges for its postcolonial countries that seek improvement in their standard of living. Kenya’s post-colonial economic development has been impeded by former colonial and post-colonial regimes that failed to implement unified, macro level economic development strategies. Over the past fifteen years, a shift from authoritarian one-party rule toward a functionally democratic state has created the opportunity to significantly modify Kenya’s economic development strategy. The country has shown several years of rapid growth, but this growth has proved neither sustainable nor widespread. The combination of a macroeconomic development strategy with a people-centered approach toward increasing the quality of living for all citizens of Kenya is now necessary. Kenya, like most developing countries, has an array of problems to overcome before their society can achieve sustainable growth. The following proposal suggests a development strategy to increase Kenya’s competitiveness in the global marketplace by exploring the political, economic, and social issues that must be addressed. From recent examples of growth and development in countries as disparate as India, Turkey, Singapore, Malaysia, and others, an overarching development theme can be detected from which Kenya can benefit. Complementary reforms that focus on economic stabilization and government reform will lead Kenya to sustainable growth. The proposal recommends free-market reform to improve macroeconomic stability, as well as reforms of government led services in infrastructure development, education, and water provisions.

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Table of Contents
1. Post-Colonialism in Kenya ........................................................................................................................ 4   2. Corruption and the Post-Colonial Transition to Democracy ..................................................................... 5   3. Stabilizing the Macroeconomic Environment through Monetary and Fiscal Policy................................. 9   3.1 Central Banking Independence ........................................................................................................... 9   3.2 An Inflation Targeting Regime for Kenya .......................................................................................... 9   3.3 Monetary Policy Directives for Kenya as an Emerging Market ....................................................... 10   3.4 Current Inflationary Pressures ........................................................................................................... 11   3.5 A Contractionary Fiscal Policy Framework for Kenya ..................................................................... 13   4. Sustainable Growth through Free Markets .............................................................................................. 15   4.1 Capital Allocation under Free Market Forces ................................................................................... 15   4.2 Paving the Way for Rapid Industrialization ...................................................................................... 17   4.3 Growth through Leveraging Natural Resources................................................................................ 19   5. Correcting the Disequilibrium in the Education Market ......................................................................... 21   5.1 Educational Development as a Tool for Growth in Kenya ............................................................... 21   5.2 The Origins of Free Primary Education in...
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