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The Impact Of Globalization On The Kenya Labor Market

969 words - 4 pages

While Kenya was definitely one of the leaders in the race towards globalization in Africa, their progression forward was plagued with stops and starts that put them at a disadvantage. It was actually not until 1993 that Kenya fully integrated itself into the global market1. As Africa gained full independence from its colonial masters, “the global trading system remained highly inefficient, with advanced economies drawing on their technological edge to enjoy tremendous market powers: monopoly or oligopoly on the supply side, and monopsony or oligopsony on the demand side (Blue Hippo).” Due to the inefficiency of the system it was even more difficult for Kenya to gain ground in the global economy and thus their economy became impaired which in turn negatively impacted the evolution of their labor market.
Globalization
To fully understand the impact of globalization on the Kenya labor market, it is crucial to illustrate what globalization is. According to the International Monetary Fund (IMF), globalization is “is the integration of economies throughout the world through trade, financial flows, the exchange of technology and information, and the movement of people (IMF).” This increased in integration and interdependence has created a complex link between the world economies which has in in turn increased each member’s reliance on the global economy. This has greatly improved the investment portfolios of business and individuals alike. With the new cross-border opportunities countries are continuing to see larger and larger amounts of their GDP coming from international trade2.
Historical View of Kenyan Economy
Once Kenya gained its independence from Britain in 1963 its economy began to bloom during the period of 1964-1980. At this time Kenya’s GDP averaged 5.5 percent per annum1. The manufacturing economy also boomed at this time at an average of 10 percent per annum, which was “fuelled by growth in domestic rural incomes and the expansion of exports to Tanzania and Uganda under the common market created by the East African Community
(EAC)(Kenya)”. This era is known as a period of extreme growth and prosperity for Kenya, especially for the manufacturing sector.
While the period of 1964-1980 was a time of growth for Kenya there were a series of shocks during the 1970s. To begin between 1976-1979 there was “the boom and bust cycle in coffee and tea prices (Kenya).” Following the dissolution of the EAC in 1977 Kenya no longer had unrestricted access to Tanzanian and Ugandan markets. Finally, in 1979 the oil price shock occurred. Due to the above shocks the deficit from GDP in Kenya grew from 3 percent to approximately 11 percent.
Economic Reforms in Kenya
In the 1970, controls were instituted to combat inflationary pressure that arose from the labor/goods market. These controls put restrictions on exports, imports, producer and retail prices, and wages. Also “ceilings were put on domestic interest rates and there were selective restrictions on...

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