The Impact of Foreign Direct Investment on Kenyan Economy

The study’s overarching goal is to dissect the correlation and impact of FDI growth rate and the relevant economic factors, namely GDP growth rate, inflation rate and employment rate. It employed a descriptive research design based on secondary data for the years between 2014 and 2023, obtained from the World Bank, International Monetary Fund reports and Central Bank of Kenya. Based on the type of data, the study chose to use descriptive statistics, coefficient of correlation and t-test to analyze and test the hypothesis. The study concluded that GDP, Inflation and Unemployment growth rates were statistically significantly different in relation to FDI growth rate in Kenya, which is an indication that the probability of the observed difference was due to the growth rate in the inflow of FDI in Kenya. On the other hand, correlation between FDI and GDP & Inflation was positive whereas that of unemployment rate was negative, which indicates, that with the increase FDI could have an inverse impact on unemployment rates in Kenya. The study recommended that the government should undertake to forester a sustainable business environment that could attract and retain foreign investment in major industries, which in-turn would increase productivity and employment opportunities in the economy.