Impact of Foreign Aid in Kenya

8/12/2019 Impact of Foreign Aid in Kenya

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THE UNIVERSITY OF NAIROBI

SCHOOL SCHOOL OF ECONOMICS

DEPARTMENT ECONOMICS

COURSE NAME: ADVANCED MACROECONOMIC THEORY I

COURSE CODE XET503

ANALYTICAL PAPER ON IMPACT OF FOREIGN AID ON GOVERNMENT PUBLIC SPENDING IN

KENYA

PRESENTED BY: MARWANGA JACKON OBARE X50/60!/"0##

TO : DR$ SETH GOR

#5THNOVEMBER% "0##

ABSTRACT


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Foreign aid represents an important source of finance in most countries in Africa countries, where it

supplements low savings, narrow export earnings and thin tax bases. In recent years the donor

community has become more stringent about fiscal discipline and good policies, which has led to

freezing of donor funds to governments that do not conform with aid conditionalities. The Kenyan

government has experienced such aid cuts in the past and this paper uses a welfare utility maximization

function to explore how government expenditure responds to fluctuations in aid flows. The empirical

results indicate that the flow of foreign aid does influence government spending patterns. There is a

positive and statistically significant relationship between the share of government expenditure in gross

domestic product !"#$ and the share of net disbursement of overseas development assistance %"A$.

The study found out that foreign aid has a positve impact on the growth of the economies when there ae

sound macroeconomic policies, its absence also creates economic stagnation of most African

economies.

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Table of Contents

1.0 Background ....................................................................................................................5

1.4 Research issue................................................................................................................. 7

2.0 Literature review..............................................................................................................8

2.2 Analytical model..............................................................................................................11

2.3 Empirical data................................................................................................................. 12

2.4 Conclusion and policy implication..

.15

References

.16

Appendices

.18


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ABBREVIATIONS

DAC "evelopment Assistance &ommittee

GDP !ross "omestic #roduct

IMF International 'onetary Fund

ODA %verseas "evelopment Assistance

OECD %rganization for (conomic &ooperation and "evelopment

OLS %rdinary )east *+uare

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#$0 B&'()*+,-.

Foreign aid is the international transfer of capital, goods, or services from a country or international

organization for the benefit of the recipient country or its population. Aid can be economic, military, or

emergency humanitarian e.g., aid given following natural disasters$.

Foreign aid is an important source of finance to a maority of developing countries since it supports the

budgetary process and therefore enhances the development of these countries, Atemn-eng . T.

/001$. The role of foreign aid in the growth process of developing countries has been a topic of intense

debate. Foreign aid is an important theme given its implications on poverty reduction in developing

countries. #revious empirical studies on foreign aid and economic growth generate mixed results. For

example, #apane- 2345$, "owling and 6iemenz 237/$, !upta and Islam 2375$, 6ansen and Tarp

/000$, 8urnside and "ollar /000$, !omanee, et al. /005$, "algaard et al. /009$, and Karras /001$,

find evidence for positive impact of foreign aid on growth: 8urnside and "ollar /000$ and 8rautigam

and Knac- /009$ find evidence for negative impact of foreign aid and growth, while 'osley 2370$,

'osley, et al. 2374$, 8oone 2331$, and ensen and #aldam /005$ find evidence to suggest that aid

has no impact on growth. It should be noted that, although 8urnside and "ollar /000$ concluded that

foreign aid has positive effects, this conclusion applies only to economies in which it is combined with

good fiscal, monetary, and trade policies, (-anaya-e. (. './007$

The main role of foreign aid in stimulating economic growth is to supplement domestic sources of

finance such as savings, thus increasing the amount of investment and capital stoc-. As 'orrissey

/002$ points out, there are a number of mechanisms through which aid can contribute to economic

growth, including a$ aid increases investment, in physical and human capital: b$ aid increases the

capacity to import capital goods or technology: c$ aid does not have indirect effects that reduce

investment or savings rates: and aid is associated with technology transfer that increases the

productivity of capital and promotes endogenous technical change.

According to 'c!illivray, et al. /001$, four main alternative views on the effectiveness of aid have

been suggested, namely, a$ aid has decreasing returns, b$ aid effectiveness is influenced by external

and climatic conditions, c$ aid effectiveness is influenced by political conditions, and d$ aid

effectiveness depends on institutional +uality. It is interesting to note that in recent years there has been

a significant increase in aid flows to developing countries although other types of flows such as foreign

direct investment and other private flows are declining. For example, according to the %rganization for

(conomic &orporation and "evelopment %(&", /003b$, foreign direct investment and other private

flows are on the decline, and remittances are expected to drop significantly in /003. 8udgets of many

developing countries were hit hard by the rises in food and oil prices in the last two years. 'any

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countries are not in a strong fiscal position to address the current financial crisis. According to the

%(&" /003b$, in /007, total net official development assistance %"A$ from members of the %(&";s

"evelopment Assistance &ommittee "A&$ rose by 20./< in real terms to =*>223.7 billion and is

expected to rise to =*>250 billion by /020. Africa is the largest recipient of foreign aid see Table 2$.

For example, net bilateral %"A from "A& donors to Africa in /007 totaled =*>/1 billion, of which

=*>//.? billion went to sub@*aharan Africa. (xcluding volatile debt relief grants, bilateral aid to Africa

and sub@*aharan Africa rose by 20.1< and 20< respectively in real terms (-anaya-e. (. './007$

#$#$ KENYAS RECORD ON ECONOMIC GROWTH

Kenya gained independence in 2315 and rapidly became the most economically successful and politically

stable country in (ast Africa orld 8an-, /005$. 6owever, during the last two decades,

Kenya;s economic growth performance has been disappointing and as a result poverty has increased.

There are several reasons for the underperformanceBpoor governance, slow and incomplete economic

reforms, low investment, poor public services delivery, underinvestment in infrastructure, corruption, and a

wea- udiciary I'F, /005$. In the past few years, the rising incidence of 6ICDAI"*, the deteriorating

security situation, and political uncertainty have also detracted from growth.

#$" E'+-+1' G*+24 #0"000

8etween 2340 and /000, Kenyan real gross domestic product !"#$ growth was 9.1 percent per year andreal per capita income grew by an average of 2.5 percent annually. 6owever, these numbers mas- the

uneven pace of economic expansion in Kenya over this period.

#$3 #07: R&81. E'+-+1' G*+24 1- A99 S'+*7

The Kenyan economy grew rapidly in the period immediately following independence, and this growth

persisted into the 2340s, when growth averaged 4.7 percent per year. The agricultural sector grew at

roughly 1 percent per year, while the industrial and service sectors expanded by an average of 22 and 7

percent, respectively, each year. As a result, per capita incomes also grew rapidly at an annual rate of 9.5

percent orld 8an-, /009b$.

This growth was in large part driven by rapid expansion in the agricultural sector, activist fiscal policies, and

the import substitution industrialization I*I$ strategy pursued by the !overnment of Kenya !overnment$.

"uring this period, the !overnment pursued a monetary policy that -ept inflation low and attempted to

reduce its reliance on foreign aid. Fiscal policy was cautious and serious efforts were made to -eep budget

deficits at sustainable levels I-iara et al., /009$. The import substitution strategy led to industrial

diversification and growth by protecting domestic firms against international competition E#(", /009$. The

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main instruments used to pursue the import substitution strategy were an overvalued exchange rate, import

tariffs and +uantitative restrictions, foreign exchange controls, and import licensing I-iara et al., /009$.

Toward the end of the 2340s, Kenya;s economic performance began to deteriorate as a result of several

factors. These included the collapse of the (ast African &ommunity in 2344: the erosion of fiscal prudence,

partly due to the windfall from the boom in coffee prices: the second oil shoc- in 2344: and the anti@export

bias of the import substitution strategy I-iara et al., /009$. 'ore generally, the inefficiencies resulting from

the distortions introduced by import substitution policies increasingly outweighed the gains in growth from

the stimulation of domestic production.

According to (-anaya-e. (. './007$, the impact of foreign aid has been the subect of very extensive

investigation. The -ey +uestion that both the donor and the recipient countries +uestion is whether aid

has any effect on developing countries; growth and their level of poverty. This issue has beenapproached from various perspectives: nevertheless, a single and definite answer still does not exist.

Therefore, it is important to note that not only factors such as the amount and type of financial aid

impact the effectiveness of available funds but also the appropriate use of these funds by the receiving

country plays a vital role.

#$; RESEARCH ISSUE

According to eru, /005$,Kenya, li-e other developing countries, faces huge external debts and is

crying out for debt relief. 'ost countries argue that given their current poverty levels, the repayment and

servicing costs of external debts are too high and unmanageable. These claims have led to the

reconsideration of issues related to the effectiveness of aid in developing countries. (arlier the aid@

savings debate focused on the two@gap model developed by &henery and *trout 2311$ that set foreign

aid as an engine of growth. &ritics of this model have argued that foreign aid substitutes domestic

resources through declined savings, reduced government tax revenue and increased governmentconsumption. ith the renewal of the debate, the +uestion remains as to whether external assistance

complements or substitutes available domestic resources. In Kenya, the answer to this +uestion is

complicated by the fact that aid flow has not been consistent. !iven Kenya;s high dependence on

foreign aid, coupled with maor aid freeze episodes, there is need to analyse the impact of aid flows on

the budget process by establishing the lin- between aid and public expenditure. A stronger association

of aid with higher government consumption rather than with public investment would suggest both a

Gflypaper effectH and fungibility. This may imply that aid recipient governments view foreign aid li-e anyother source of revenue and conse+uently use it for increased consumption, tax reductions or reduced

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fiscal deficits future tax obligations. A -ey discussion would be what proportion of increased spending

resulting from increased donor funds goes to either recurrent or development expenditures. The answer

can shed some light on the implications of an aid freeze to recipient countries, and highlight how the

Kenyan government responds to resultant budgetary deficits.This study will focus on the impact of

foreign aid on government public spending in Kenya.

"$0 LITERATURE REVIEW

"$# THEORETICAL FRAMEWORK

There has been concern over the role of and effectiveness of forein aid flow in promoting growth and

development in developing countries. !iven that, most of the foreign aid to Kenya is channeled through public

sector, its not possible therefore to analyse the effectiveness of these flows in Kenya without studying the impact

of such flows on public spending)agat, 2339$

The development theory upon which the issue of forein aid drwas its existence dates bac- to the 2350s 'arshall

plan and the emergency of growth models in the late 2390s. Adam *mith and "avid Eicardo advocated for

specialization of labor, foreign trade, capital accummulation and increased productivity as being the fundamental

determinants of growth*chumpeter, 2393$.

This analytical paper borrows heavily from 6arod "omar model which extended the Keynesian emphasis on

investment to include capacity increasing effects, the sencond was the emphasis by economists on physical

capital and the view that shortages of capital largely account for the poverty of the developing countries. The role

of and impact of foreign aid followed logically from this analysis)agat 2339$

6eller234?$ developed across@sectional times series mode to analyse the behavior of the public sector in all

African countries to foreign flow. *pecifically hewas concerned whether foreign capital inflow has resulted in

increased public or private consumption or increased investment re+uired to boost the economy.

The model focuses on the interractions among several categories of public expenditure and the relationship

between domestic and foreign revenues. It further distinguishes alternative types of aid and their sources.

6eller assumed that decision ma-ers maximise their utility subect to some constraints li-e alternative use of

public resources, distribution of output between private and public alternative modes of domestic financing and

alternative types of external assistance such as grants and loans.

The relationship between foreign aid and economic growth has drawn great attention for years, but the

empirical results are mixed. There is now a large literature on the relationship between aid and growth.

For a recent comprehensive survey of the theoretical and empirical literature on foreign aid and growth

see 6udson /009$ and 'c!illivray, et al. /001$.

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A study conducted by 'c!illivray /00?$ demonstrates how aid to African countries not only increases

growth but also reduces poverty. Furthermore, the author points out the important fact that continuously

growing poverty, mainly in sub@*aharan African countries, compromises the '"!s 'illennium

"evelopment !oals$ main target of dropping the percentage of people living in extreme poverty to half

the 2330 level by /02?. 6is research econometrically analyzes empirical, time series data for 2317@

2333. The paper concludes that the policy regimes of each country, such as inflation and trade

openness, influence the amounts of aid received. %uattara /001$ analyzes the effects of aid flows on

-ey fiscal aggregates in *enegal. This paper utilizes data over the period of 2340 /000 and primarily

focuses on the interaction between aid and debt. The author determined three main outcomes of his

study. First, that a large portion of aid flows, approximately 92


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A study by Karras /001$ investigates the correlation between foreign aid and growth in per capita !"#

using annual data from the 2310 to 2334 for a sample of 42 aid@receiving developing countries. This

paper concludes that the effect of foreign aid on economic growth is positive, permanent, and

statistically significant. 'ore specifically, a permanent increase in foreign aid by >/0 per person results

in a permanent increase in the growth rate of real !"# per capita by 0.21 percent. These results are

obtained without considering the effects of policies. !omanee, !irma, and 'orrissay /00?$ address

directly the mechanisms via which aid impacts growth. =sing a sample of /? *ub@*aharan African

countries over the period 2340 to

ournal of International 8usiness and &ultural *tudies 2334, the authors determined that foreign aid has

a significant positive effect on economic growth. Furthermore, they identified investment as the most

significant transmission mechanism.

In his research, Eam /009$ loo-s at the issue of poverty and economic growth from the view of

recipient country;s policies as being the -ey role in the effectiveness of foreign aid. evertheless, in his

paper the author disagrees with the widely@ac-nowledged view that redirecting aid toward countries with

better policies leads to higher economic growth and poverty reduction rates. As a result, based on his

research the author concludes that evidence is lac-ing to support the leading belief that directing foreign

assistance to countries with good Jpolicy; will increase the impact on growth or poverty reduction in

developing countries

eru, /005$ did a study on the fiscal response by the government to changes in aid flow. 6e

recommended further research on the brea-down of the sources of revenue and expenditure use by the

public sector at sectoral levelBe.g., transport and communications networ-s, education, health,

agriculture, defence, etc.Bwould shed more light on the understanding of how policy ma-ers in the aid

recipient country ma-e their public sector decisions.

'wau2379$ attempted to analyse the impact of foreign aid inflows on the Kenya economy. 6e

examined the effects of foreign capital inflow on investment, foreign trade and hence the balance of

payment, money supply and economic growth in Kenya. 6e used %)* method of estimation. 6e found

out that, foreign capital inflow have some stimulatory effects on domestic investment, with small effects

on economic growth.

)agat2339$ did a study on foreign aid impact on public expenditure and its fungability in Kenya for a

period between 2349@233/. 6e sought to analyse whether foreign aid assistance provides for

development expenditure is fungible, whether it reduces tax efforts tothe government and the impact of

total foreign aid and the macroeconomic reforms of public expenditure.

1"


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"$" ANALYTICAL FRAMEWORK/MODEL

This section discusses the methodology used for analysing the government;s response to aid flow

fluctuations resulting from aid freezes. The approach used to determine the effects of foreign aid on

government expenditure follows 6eller;s 234?$ utility model, which assumes that the recipient country

intends to maximize the social welfare of its own citizens in the face of budgetary constraints and uses

aid flows from overseas as an instrument in pursuit of the obective. Cariants of this model include

'c!uire 2347$: #ac- and #ac- 2330, 2335$: and Feyzioglu et al. 2337$. Assume that the

government;s obective is to maximize the welfare utility function subect to the prevailing budget

constraint. To achieve the obective, policy ma-ers formulate targeted levels of expenditure based on

proected economic growth and social development obectives. For simplicity, assume that the

government purchases some minimum +uantities of two types of public goodsBnon@

developmentrecurrent$ !E$ and development !d$Bfor its citizens. *upposing the welfare utility

function is multiplicative and is specified as

'aximize U (GR,Gd) = GR L Gd 1-L.............................................i$

where the


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Gt = !0+ N1DRt+ N2PAt +[N2M +1- M] PJAt+ Otiii$

Ot this represents the error term

All the variables will be expressed as a ratio of real !"#.

V&*1&>9 D7'*181+- &-. D&& S+,*'7

In order to test the implications of these models, a panel of aggregate data on foreign aidDgrants on

Kenya for a period of 20 years/000@/020$ was obtained from &entral ban- of Kenya. The sample

contains aggregate data for government expenditure and revenues for the study period. e can only

understand about the impact of aid flow once we factor in aid freeze as to be able tu understand to

government spending once aid is frozen. The data used in the empirical analysis is given in Appendix

Table 2.

"$3 EMPIRICAL DATA

Foreign aid and public government spending

E E *+uare Adusted E *+uare *td. (rror of the (stimate

.945a .//9 .254 5.257

C+??1'1-7&

'odel

=nstandardized &oefficients

*tandardized

&oefficients

8 *td. (rror 8eta

2 &onstant$ 9.57/ /.050

#roect grants and program grants for the

period /000@/020

.97/ ./33 .945

'odel

3?.0< &onfidence Interval for 8

t *ig. )ower 8ound =pper 8ound

2 &onstant$ /.2?3 .0?3 @./03 7.345

#roect grants and program grants for the

period /000@/020

2.120 .29/ @.23? 2.2?3

a. "ependent Cariable Total government expenditureEecurrent and development$

!overnment taxes and non taxes revenue and public government spending

12


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M+.9 S,&*@>

'odel

&hange *tatistics

E *+uare &hange F &hange df2 df/ *ig. F &hange "urbin@atson

2 .150 2?.52/ 2 3 .009 /./13

b. "ependent Cariable Total government expenditureEecurrent and development$

A%CAb

'odel *um of *+uares df 'ean *+uare F *ig.

2 Eegression 42.325 2 42.325 2?.52/ .009a

Eesidual 9/./13 3 9.134

Total 229.27/ 20

a. #redictors &onstant$, !overnment revenue collection from /000@/020

1


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M+.9 S,&*@>

'odel

&hange *tatistics

E *+uare &hange F &hange df2 df/ *ig. F &hange "urbin@atson

2 .150 2?.52/ 2 3 .009 /./13


A%CAb

'odel *um of *+uares df 'ean *+uare F *ig.

2 Eegression 42.325 2 42.325 2?.52/ .009a

Eesidual 9/./13 3 9.134


C+??1'1-7&

'odel

=nstandardized &oefficients

*tandardized

&oefficients

8 *td. (rror 8eta

2 &onstant$ 2.774 2.?/9

!overnment revenue collection

from /000@/020

.702 ./0? .439


C+??1'1-7&

'odel

3?.0< &onfidence Interval for 8

t *ig. )ower 8ound =pper 8ound

2 &onstant$ 2./57 ./94 @2.?10 ?.555

!overnment revenue

collection from /000@/020

5.325 .009 .557 2./19


14


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)et;s first discuss the estimated results that are presented in Table /. The conventional variables

behave very much the same way as the model predicts, and the estimated coefficients are statistically

significant. The R2values range from a low of 0.//9 to a high of 0.439.

These values, though relatively low, are acceptable for a panel series data for study and are

comparable to those obtained in other studies. The coefficients of the first two variables in model iii$ are

expected to be positive and the results are consistent.

Foreign aid variable has a positive sign in all the cases, indicating that foreign aid appears to have an a

positive effect on government spending in Kenya. This coefficient is statistically significant for all cases

at 3?< confidence level. The s+uare term is also found to be statistically significant.

"$; CONCLUSIONS AND POLICY IMPLICATIONS

This paper analyzes the effects of foreign aid on the government public spending in Kenya. These

effects are analyzed using panel data series for foreign aidgrants$, government revenue and

expenditure. %ne of the contributions of this paper is its input to the existing empirical literature on the

effects of foreign aid on economic growth of developing countries sampling out Kenya as a case study.

The maor point emerging from this wor- is that foreign aid has a positive impact on economic growth of

developing countries Kenya included. The variables are positive indicating that foreign aid has a positive

effect on public spending. Aid supplements government revenue and thus included in the budgetary

process. This is not surprising given that Africa is the largest recipient of foreign aid than any other

region. Thus, the findings of this study are, for the most part, consistent with findings of previous studies

on the impact of foreign aid on public government spending.

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REFERENCES

Atemn-eng . T. /001$. Foreign Aid and the #ublic *ector 8udget #rocess in a "eveloping &ountry

the case of &ameroon. #aper presented at the First International &onference on the *tate of Affairs of

Africa I&*AA$, to be held from %ctober /1 @ /7 th, /001 at the 8oston Puincy 'arriot 6otel in Puincy,

'A, to address the crippling development crisis in Africa, &onference organized by the International

Institute for ustice and "evelopment*' II"$, Inc.

(-anaya-e. (. './007$.The effect of foreign aid on economic growth in developing countries. ournal

of International 8usiness and &ultural *tudies. #age /@22 httpDDu-.oneworld.netDguidesDaid

&henery. 6. and A.'. *trout. 2311. GForeign assistance and economic growthH. American EcnmicRe!ie", )CI *eptember$, Col ?1143Q455.

&assen, E. et al.2339. De# Aid $r%& &laredon #ress, %xford =niversity #ress.

6eller, *.#. 234?. GA model of public fiscal behvior in developing countries Aid, investment andtaxationH.American Ecnmic Re!ie", vol. 1?, no. 5 une$ 9/39?.

Feyzioglu, T., C. *waroop and 'in Rhu.2337. GA panel data analysis of the fungibility of foreign aidH.$rld 'an% Ecnmic Re!ie", vol. 1? 9/39?.

#ac-, 6. and .E. #ac-. 2330. GIs foreign aid fungibleS The case of IndonesiaH. Ecnmic Jrnal, vol.200 no. 5 27739.#ac-, 6. and .E. #ac-. 2335. GForeign aid and the Puestion of fungibilityH. Re!ie" Ecnmic# and*tati#tic#, vol. 4?, / /?71?.#apane-, !. 234/. GThe effect of aid and other resource

)agat2339$, Foreign aid impact on public expenditure and its fungability in Kenya

'wau2379$, The impact of foreign aid inflows on the Kenya economy

I-iara, 'oses '., and )ydia K. dirangu. /005. G#rospects of Kenya;s &lothing (xports =nder A!%Aafter /009.H KI##EA "iscussion #aper /9. airobi Kenya Institute for #ublic #olicy Eesearch andAnalysis.!omanee, K. and %. 'orrissey, /00/. G(valuating aid effectiveness against a poverty reduction

criterionH, "(*! &onference #aper, ottingham, April /00/.Kahn *unday A. and Amia !. /009. GColatility of resource inflows and "omestic Investment in

&ameroonH, Final Eeport presented at the African (conomic Eesearch &onsortium, A(E&, airobi

une$

eru, ames. /009. GThe impact of foreign aid on public expenditure The case of KenyaH. African

(conomic Eesearch &onsortium, Eesearch paper no. 25? 'arch$,

Tabi A. . /005. G(valuating the incidence of indirect tax reforms in &ameroonH. African ournal of

(conomic #olicy, Col. 20, o. / "ecember$.

8urnside, &., and ". "ollar /000$, GAid, policies and growth,H American (conomic Eeview 30, 794@17.

16
http://uk.oneworld.net/guides/aidhttp://uk.oneworld.net/guides/aid


17/35

!upta, K. 234?$, GForeign capital inflows, dependency burden and savings rates in developing

countries A simultaneous e+uation model,H Ky-los /7, 5?7@549.

)evy, C. 2377$, GAid and growth in the *ub@*aharan Africa The recent experience,H (uropean

(conomic Eeview 5/, 2444@243?.

8arro, E. . and . *ala@i@'artin /009$, (conomic !rowth /nd ed$. 'IT #ress &ambridge, 'A.

Karras, !. /001$, UForeign aid and long@run economic growth empirical evidence for a panel ofdeveloping countries,UJrnal nternatinal De!elment, vol.27, no.4, p.2?/7.

%uattara, 8. /001$, UForeign aid and government fiscal behavior in developing countries #anel dataevidence,U Ecnmic delin, vol./5, p.?01@?29.

Eam, E. /009$, UEecipient country;s Jpolicies; and the effect of foreign aid on economic growth indeveloping countries additional evidence,U Jrnal nternatinal De!elment, vol.21, no./, p./02

/22.

A88-.1'7

17


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T&>9 #

F17'&9

@&*7

P*+)*&

)*&-7K74%

M1991+-7

P*+'

)*&-7

K74%

M1991+-7

T+&9

?+*1)-

&1.K74%

M1991+-7

T+&9

*',**-

8-.1,*

K74%

M1991+-7

T+&9

.9+8-

8-.1,*

K74% M1991+-7

T+&9

8-.1,*K

74% M1991+-7

/000 /0?7 /9,727 /1,741 ?30,744 43,?9? 140,9//

/002 /5534 41,2/5 33?/0 2,/99,990 217,?/? 2,92/,31?

/00/ 4934 54,71/ 9?,5?3 2,/32,97? 297,392 2,990,9/1

/005 24111 49,/10 32,3/1 2,90/,525 /24,305 2,1/0,/21

/009 /1/37 49,534 200,13? 2,930,424 /0/,597 2,135,019

/00? ??19 70,770 71,999 2,142,330 /11,332 2,357,372

/001 /27?? 73,?73 220,240 2,339,45/ 519,4?5 /,510,347

/004 0 72,071 43,7/0 /,224,927 931,047 /,123,241

/007 //??9 22?,322 257,91? /,933,494 134,9/7 5,234,24?

/003 0 20/,729 20/,729 /,71?,4?4 792,712 5,17?,?/5

/020 0 2/0,4/0 2/0,4/0 5,557,725 2,/04,215 9,?90,55/

T+&9 #"6%!! !!%;60 #%00"%!0 "0%50!%"! ;%6#%536 "5%#%"5!

S+,*' C-*&9 >&-( +? K-@&% J,9@ "0##

T&>9 "

Fiscal year Total revenueTax and on tax$Ksh, 'illions/000 12?,940

/002 2,/04,127

/00/ 2,/23,9//

/005 2,559,151

/009 2,?1/,??5

/00? 2,433,131

/001 /,001,5/7

/004 /,5?1,3?4

/007 /,491,074

/003 5,205,1/1

18


19/35

/020 5,?24,924

Total 21#46!#81"

S+,*' C-*&9 >&-( +? K-@&% J,9@ "0##

Results of analysed data

Correlations

Total

government

expenditure(Rec

urrent and

development)

Governemt

revenue

collection from

2000-2010

Pearson Correlation Total government

expenditure(Recurrent and

development)

1.000 .!"

Governemt revenue

collection from 2000-2010

.!" 1.000

#ig. (1-tailed) Total government


development)

. .002

Governemt revenue


.002 .

$ Total government


development)

11 11

Governemt revenue


11 11

1!


20/35

Model Summaryb

%odel R R #&uare

'dusted R

#&uare

#td. rror of t*e

stimate

1 .!"a .+,0 .! 2.1+

a. Predictors/ (Constant) Governemt revenue collection from 2000-

2010

. ependent 3ariale/ Total government expenditure(Recurrent and

development)

Model Summaryb

%odel

C*ange #tatistics

R #&uare

C*ange 4 C*ange df1 df2 #ig. 4 C*ange urin-5atson

1 .+,0 1.,12 1 ! .00" 2.2+!

. ependent 3ariale/ Total government expenditure(Recurrent and development)

2"


21/35

ANOVAb

%odel #um of #&uares df %ean #&uare 4 #ig.

1 Regression 1.!1, 1 1.!1, 1.,12 .00"a

Residual "2.2+! ! ".+!

Total 11".12 10

a. Predictors/ (Constant) Governemt revenue collection from 2000-2010


Coefficientsa

%odel

6nstandardi7ed Coefficients

#tandardi7ed

Coefficients

8 #td. rror 8eta

1 (Constant) 1. 1.2"

Governemt revenue


.01 .20 .!"

a. ependent 3ariale/ Total government expenditure(Recurrent and development)

21


22/35

Coefficientsa

%odel

!.09 Confidence :nterval for 8

t #ig. ;o


23/35

Correlations

Total

government


development)

Total government

revenue(Taxescollections and

'id)



development)

1.000 .!"

Total government

revenue(Taxes collections

and 'id)

.!" 1.000



development)

. .002

Total government


and 'id)

.002 .

$ Total government


development)

11 11

Total government


and 'id)

11 11

2


24/35

Model Summaryb

%odel R R #&uare

'dusted R

#&uare

#td. rror of t*e

stimate

1 .!"a .+,0 .! 2.1+

a. Predictors/ (Constant) Total government revenue(Taxes collections

and 'id)


development)

Model Summaryb

%odel

C*ange #tatistics

R #&uare


1 .+,0 1.,12 1 ! .00" 2.2+!


24


25/35

ANOVAb


1 Regression 1.!1, 1 1.!1, 1.,12 .00"a

Residual "2.2+! ! ".+!

Total 11".12 10

a. Predictors/ (Constant) Total government revenue(Taxes collections and 'id)


Coefficientsa

%odel


#tandardi7ed

Coefficients

8 #td. rror 8eta


Total government


and 'id)

.01 .20 .!"


25


26/35

Coefficientsa

%odel


t #ig. ;o


27/35

Coefficient Correlationsa

%odel

Total government

revenue(Taxes

collections and'id)

1 Correlations Total government


and 'id)

1.000

Covariances Total government


and 'id)

.0"2

a. ependent 3ariale/ Total government expenditure(Recurrent and

development)

Residuals Statisticsa

%inimum %aximum %ean #td. eviation $

Predicted 3alue 2.+! 10.+! .2 2.+2 11

Residual -1.+ .!11 .000 2.0+ 11

#td. Predicted 3alue -1.10 1.2+ .000 1.000 11

#td. Residual -.! 2.2 .000 .!"! 11


27


28/35

Correlations

Total

government


development)

Governemt

revenuecollection from

2000-2010



development)

1.000 .!"

Governemt revenue


.!" 1.000



development)

. .002

Governemt revenue


.002 .

$ Total government

expenditure(Recurrent anddevelopment)

11 11

Governemt revenue


11 11

28


29/35

Model Summaryb

%odel R R #&uare

'dusted R

#&uare

#td. rror of t*e

stimate

1 .!"a .+,0 .! 2.1+

a. Predictors/ (Constant) Governemt revenue collection from 2000-

2010


development)

Model Summaryb

%odel

C*ange #tatistics

R #&uare


1 .+,0 1.,12 1 ! .00" 2.2+!


2!


30/35

ANOVAb


1 Regression 1.!1, 1 1.!1, 1.,12 .00"a

Residual "2.2+! ! ".+!

Total 11".12 10

a. Predictors/ (Constant) Governemt revenue collection from 2000-2010


Coefficientsa

%odel


#tandardi7ed

Coefficients

8 #td. rror 8eta


Governemt revenue


.01 .20 .!"


"


31/35

Coefficientsa

%odel


t #ig. ;o


32/35

Coefficient Correlationsa

%odel

Governemt

revenue

collection from2000-2010

1 Correlations Governemt revenue


1.000

Covariances Governemt revenue


.0"2

a. ependent 3ariale/ Total government expenditure(Recurrent and

development)

2


33/35

Residuals Statisticsa

%inimum %aximum %ean #td. eviation $

Predicted 3alue 2.+! 10.+! .2 2.+2 11

Residual -1.+ .!11 .000 2.0+ 11

#td. Predicted 3alue -1.10 1.2+ .000 1.000 11

#td. Residual -.! 2.2 .000 .!"! 11


Model Summary

b

%odel R R #&uare

'dusted R

#&uare

#td. rror of t*e

stimate

1 .",a .22" .1, ,.1,

a. Predictors/ (Constant) Proect grants and program grants for t*e

period 2000-2010


development)

Model Summaryb

%odel

C*ange #tatistics

R #&uare


1 .22" 2.!, 1 ! .1"2 1.,,



34/35

ANOVAb


1 Regression 2.,+ 1 2.,+ 2.!, .1"2a

Residual .+" ! !."!

Total 11".12 10

a. Predictors/ (Constant) Proect grants and program grants for t*e period 2000-2010


Coefficientsa

%odel


#tandardi7ed

Coefficients

8 #td. rror 8eta

1 (Constant) ".,2 2.0,0

Proect grants and program

grants for t*e period 2000-

2010

."2 .2!! .",


4


35/35

Coefficientsa

%odel


t #ig. ;o

Documents

Impact of Foreign Aid in Kenya