Determinants of Imports Demand in Kenya

This study investigated major determinants of import demand in Kenya, using annual time series data on study variables for the period 1970–2020. It disaggregates the expenditure components of national income to investigate how expenditure and relative import prices affect the import demand of the country. Through use of consumer demand theory framework, the study formulated an import-demand function with real value of imports being the outcome variable, the determinants of imports as the explanatory variables, and followed Khan (1974), the aggregate demand system. To determine the relationships among the variables, an Autoregressive Distributed Lag model was applied to estimate the resulting conditional ECM. A long run relationship between imports, government consumption, investment, and exports were established. A negative relationship was however established between relative prices and imports.