This study analyses how changes in factor abundance and trade policy have affected factor prices in Kenya since 1964. First there was a period of capital deepening, but this was reversed from 1982. As a result, there has been a shift of production towards the labour-intensive informal sector. The econometric analysis shows that in the long run factor proportions determined relative factor returns; for instance, an increase in the capital-labour ratio raised the wage-capital rental ratio. We did not find any significant impact of changes in goods prices, due to among other things changes in trade policy, on factor returns.
SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv (hsv//swe)
SOCIAL SCIENCES -- Economics and Business (hsv//eng)
Factor abundance; trade policy; globalisation; factor prices; Kenya