Are Foreign Firms More Productive, and Export and Technology Intensive, than Local Firms in Kenyan Manufacturing?

This paper uses firm level survey data to examine productivity, and export, skills and technological intensities between foreign and local firms in Kenyan food and beverages, metal engineering, and textile and garment. Foreign firms enjoyed statistically highly significant higher labour productivity means than local firms in textile and garment manufacturing. Foreign firms were also more export and technology intensive than local firms in textile and garment (process technology and R&D), and metal engineering (HR). Foreign firms' enjoyed higher and statistically significant skills and overall technology (HR and R&D) means than local firms in food and beverage. The econometric exercise showed that foreign ownership enjoyed a statistically significant and positive relationship with overall technological and HR intensities. Against labour productivity, the coefficient of technology index was higher in the foreign firms' sample than in the local firms' sample. Local firms enjoyed higher value added in domestic than export markets. Export-intensity enjoyed a positive relationship in the process technology regressions, but an inverse relationship in the HR regressions in the foreign firms' sample. Overall, the significant Kenyan results suggest that foreign firms' technology, productivity and export-intensity levels in economies with weak institutions tend to be superior to local firms.