Abstract:
Kenya‟s investment by private individuals and firms has not been sustainable since the country attained
independence. This rather sorry state of affairs has raised concern to the government since investment is
considere
d a key component propelling economic growth and development. Government of Kenya has
designed many policies aimed at encouraging private investment but little fruits have been borne. This study
aimed at finding out the repercussions of government expendit
ure on private investment in Kenya. The study
adopted VAR technique using time data for period 1963
-
2012. The research findings indicated that that both
recurrent and development expenditure enhanced private investment. The reforms on public expenditure we
re
found to deter activities of private investors. The study concluded that there was need for government to re
-
allocate funds towards project that are valuable to the private sector and eschew from those that contend with
or crowd it out. The study recomm
ended that government should undertake fiscal reforms in the areas that
promote private investment. Such reforms were expected to encourage investors because that was a sign of
government commitment prudent financial manage
.
