In a 2007 Kenyan presidential
election, both the incumbent Mwai Kibaki and the opposing candidate Ralia
Odinga claimed to be the winners. A new
constitution was written in 2010 following a an agreement to split power between
the candidates. (See “2007-2008 Kenyan
Crisis” section.) In 2009, the negative
economic effects of the post-election violence began to subside, and Kenya
became the vital core of East African communication, finance, and
transportation.
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| Agriculture is a major component of the Kenyan economy |
In contrast to the
economic progress worldwide, Kenya’s improvements are relatively minor. Their economic freedom score is 55.9, as
opposed to the United States’ score of 76, and Hong Kong, which ranks highest
worldwide, at 89.3. Based upon Adam
Smith’s principles in The Wealth of
Nations, the Wall Street Journal and the Heritage Foundation have partnered
to gauge the economic success of countries worldwide based on a set of 10
benchmark freedoms, including entrepreneurship and property rights. Of the 185 countries assessed by the Heritage
Foundation, Kenya is ranked 114th in its economic freedom. The country has deteriorated in five of the
benchmark freedoms, including business, labor, and monetary freedoms. Within a population of 40.9 million, Kenya’s
per capita GDP is merely $1,746. The
unemployment rate is 40%. According to
the Heritage Foundation, a culmination of weak administration, widespread
corruption, and system of law plagued with political bias is keeping Kenya’s
economic activity from significantly improving.
Industrialization is not occurring rapidly, as agriculture remains a
major component of Kenya’s economy, accounting for approximately one quarter of
the total GDP. Climate change and
drought threatens the well being of the country's poor. Kenya's economic growth rate as of 2012 was 4.3% and the unemployment rate is high, especially among the
youth, which fosters competition and therefore discrimination among Kenyans
seeking jobs (800,000 enter annually into the labor force). The slow growth rate
hinders an increase in jobs, and since a strong job market is vital for a
healthy economy, Kenya’s economic stability may suffer. However, minor improvements have been made in
an effort to stabilize the economy. Debt
levels were sustainable, and inflation rapidly declined in 2012 as a result of
a drop in fuel and food prices, and also higher interest rates. These positive economic indicators may eventually help Kenya's economy to grow at a rate of 5% during 2013. Additionally, in northern Kenya, a
potentially successful oil exploration project is emerging, which could further benefit the country's economic stability and growth.
Kenya
exports agricultural products to Europe and manufactured products, such as
garments, to America. Over 60 American
companies (such as IBM and General Electric) operate in Kenya, and as American
foreign investment in Kenya increases, the “U.S. government has proposed a new
trade and investment partnership with the East African Community (EAC), of
which Kenya is a member.” Thus the economic relationship
between the U.S. and Kenya is growing stronger.
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