Kenya-china Trade On Manufactured Goods: Complementarity And Intensity

With the main objective being to analyze the competition, complementarity and intensity of Kenya China trade on manufactured goods, this research paper uses Revealed Comparative Index, Trade Complementarity Index and Trade Intensity for analysis.Results indicate that trade on manufactured goods between Kenya and China is highly complementary. Kenya generally has a comparative disadvantage in manufactures hence lack competitiveness while China's comparative advantage is very strong hence highly competitive products. Kenya's exports hardly complement China's imports while China exports highly complement Kenya's imports hence the high imports of manufactures from China to Kenya. Research on trade intensity shows that Kenya's products penetration to China is low; hence Kenya under exports to China on manufactured goods while China's exports to Kenya are normal and as expected. This implies that there's potential room for growth for Kenya's exports to China. Thus,Kenya should bring out its comparative advantages and modify its product composition and structure of exports in manufactured goods which will aid to realize mutual benefit and cooperation on bilateral trade between both countries i.e., Kenya and China. An analysis of the constraints hindering Trade on manufactured goods shows that Poor business environment in Kenya and lack of a sound trade policy between Kenya and China are the major challenges among others.This paper is divided into six parts. The first part is the introduction; the second part provides a review of the previous literature on this topic. The third part provides a theoretical basis, giving a basic expression of the Ricardian Model -Labour productivity and Comparative Advantage; Resources and Trade: The Heckscher-Ohlin Model and The Theory of Competitive Advantage of Nations. The fourth part presents reality on trade between Kenya and China in manufactured goods based on the results and discussion of the findings, the fifth part discusses the challenges facing Kenya China trade on manufactured goods while the sixth and last part provides a conclusion and the recommendations.