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Name:Determinants of manufacturing firm’s location in Kenyan counties
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Establishment of manufacturing firms in a given location is expected to create
employment and reduce poverty. Kenyan counties are no exception; for them to
continuously address existing unemployment and high poverty levels, they have
to attract manufacturing firms. However, all counties are not endowed the same
way, leading to variations in the number of manufacturing firms located in each
county. This study investigates the determinants of location of manufacturing
firms in Kenyan counties. It uses negative binomial regression model and has
found that insecurity level, agglomeration economies, availability of water,
availability of roads, and cost of land determine the location of manufacturing
firms in Kenyan counties.

The study recommends enhancement of local partnership between the national
and county governments as a way of reducing crime. County leadership should
establish systems of monitoring the effects of crime on existing and prospective
manufacturing firms and other investments. Secondly, Water Service Providers
(WSPs) should consider supplying industrial water at subsidized rates, and
in county areas where such WSPs are inadequately covered, firms should be
allowed to directly tap industrial water from sources within the counties. Further,
counties should fund projects involving water-piping, drilling of boreholes and
construction of dams. Thirdly, when firms want to locate in an interior part of
a county, construction of roads to such parts should be prioritized. In addition,
regular repairs to existing roads leading to plants should be done as well as
maintenance of major roads connecting different counties in order to increase
accessibility to the external market. Further, provision of industrial packs with
improved infrastructure around them would boost agglomeration economies
for manufacturing firms and other investments. Lastly, since the cost of land in
counties may not come down any soon, leasing of industrial land to firms at a lower
cost would attract and retain firms. It is envisaged that these recommendations
would positively inform county leadership and, if eventually actualized, counties
would be on the right path towards addressing unemployment and poverty.

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Created On: 09/18/2014 10:40
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