example, mentions that in addition to mergers, consolidations and acquisitions (horizontal and
vertical restructuring), cooperatives have become increasingly involved in fundamental
institutional changes (e.g., conversion to IOFs, and joint ventures with

Dutt A.K. and Lee K.Y. (1993). The service sector and economic growth: some cross-section
evidence, International Review of Applied Economics, 7(3) 311-329
Dutt S.D. and Ghosh D. (1994). An empirical investigation of the export growth-economic
growth rela

Figure 4.11 Other buyers of milk from the area
From the above diagram,both brokers and other bigger processing firms cover a total of (88%)
followed by other farmers (12%) This deduces the nature of a liberalized market.Other farmers
may include those who

example, Abhayarante, 1996; Hussain & Chung, 1999; Chuang, 2000; Ramirez, 2000
and Narayan & Smyth, 2005 ). Therefore, the core model employed to investigate the impacts of
trade liberalization in export-led growth hypothesis was a Cobb-Douglas production

Equations (2.10) can be substituted into equation (2.9) to obtain the following relation:
(1 g
GDP
t
a
t
na
t
)GDPt i (1 g ) At i (1 g ) NAt i
(2.11)
Rearranging equation (2.11) gives
g tGDP g ta A
GDP
t i
g tna NA
GDP
(2.12)
t i
It is apparent from equa

establishment of export processing zones. With the presumption that trade liberalization
must raise the growth of exports and economic performance?. But, the crucial questions are:
Does export performance depend on the liberalization process itself? and i

Figure 4.12 Effect of other buyers to the cooperatives
Figure 4.12 above indicates that majority of respondents; 52% of cooperative managers and 50%
of cooperative farmers indicate that they are highly affected by other buyers on the market, this
may mean

Fies and Verner (2001) analyzed sectoral growth in Ecuador using multivariate
cointegration analysis. They found significant long-run relationships between the agricultural,
industrial, and service sectors. Moreover, they were able to derive dynamics sect

is the stationary linear combination of integrated variables whose mean represents the long run
equilibrium.
The Engel-Granger regression is very unusual, because it is the only situation where it is
legitimate to perform OLS regression on non-stationary

diversification on agricultural cooperatives was an important factor in determining membership
size i.e. diversified cooperatives enjoyed larger membership.
The technical efficiency and scale economies of the dairy marketing cooperatives were estimated
by

t
is a vector of errors that are assumed to be independently and identically Gaussian
distributed.
is a difference operator, k denotes the lag length.
If the variables in
that
is of a reduced rank
of cointegration:
while
xt
were integrated of order 1, tha

From the findings above, majority of farmers (50%) view that Consistency of application of the
cooperative laws improves the performance of their cooperative society,(36.7%) are neutral that
the government supports the cooperative societies policies and s

error term and to leave degrees of freedom (In and Sugema, 1995). Moreover, Boswijk
and Frances (1992) in Awudu and Delgado, (1999) emphasize that the results from VAR models
are sensitive to lag-length choice. They therefore, suggested the application of

From this it can be deduced that cooperative managers have adequate milk preservative facilities
(100%) while only 30% of the cooperative farmers have preservative facilities. This explains the
importance of the cooperative societies to cooperative farmer

economic growth in developed countries, he ran a regression of GDP growth on
agricultural growth
g
a
t
using a reduced form model:
(2.8)
g tGDP g ta t
Where
g tGDP
is the growth of GDP,
g ta
is the growth of agricultural output,
indicates the
strength an

Fourth, Marketing board deficits. Agricultural marketing reforms generally aimed to
reduce the role of public sector and to encourage private sector so as to set markets allocate
scarce goods more efficiently. Marketing boards experience major reforms und

It behoves me to acknowledge with grateful thanks the generous financial assistance
rendered by German Foreign Academic Exchange (DAAD); without the DAAD scholarship my
PhD studies would have been impossible.
It has been a great privilege spending several

Figure 2: Breakpoint for exports
4.3.2 Testing for Cointegration
The finding in the preceding section that the variables contain a unit root raises the
possibility of a long run relationship between them. Accordingly, it was appropriate to evaluate
their

education and training to the constitution of Kenya (2010) and Kenya Vision 2030 and beyond is
in the right direction.
The predictions of new growth theory are many and varied and stress that investment in
both physical capital acts as a driving force in

In ADF and PP tests, the null hypothesis in the series has unit root against the alternative
of stationarity, while for KPSS the null hypothesis in the series is stationary. Thus, KPSS is used
to complement ADF and PP tests in order to have robust results

had negative effect on Kenyas economic growth. It is recommended that to sustain high
levels of agricultural growth, reforms need to be designed to increase productivity by providing
smallholders with incentives such as strengthening markets for inputs an

(GDE) hypothesis, postulates a reverse relationship. It is based on the idea that economic
growth itself induces trade flows. It can also create comparative advantages in certain areas
leading to further specialization and facilitating exports. These two

Hossian F. & Chung P. J. (1999). Long-run implications of neoclassical growth models:
empirical evidence from Australia, New Yealand, South Korea and Tawain, Applied
Economics, 31, 231-254.
Hsiao F. S. and Hsiao M. W. (2012) FDI; exports, and GDP in East

forward by Cang and Seteeram (2012) stating that when performing unit root tests it is
crucial to select the number of augmenting lags. The number of lags is determined by
minimizing the Scwartz BIC or minimizing the Akaike information criterion or lags a

each of these costs to a greater or lesser extent, with each transaction cost item being influenced
by social institutions (norms of behaviour), legal institutions (definition and enforcement of
property rights), political institutions (mechanisms by whic

From this particular finding, it is concluded that majority are satisfied with the application of
legal and framework laws. This can be attributed to the fact that they are formulated and
enforced by the cooperative act of Kenya and supported by the gover

growth hypotheses. In the Czech Republic, Granger causality flows from both exports
and imports to economic growth thus providing empirical support for both export-led growth and
growth-led growth hypotheses. In contrast, only the import-led growth hypoth

estimated consistently using linear regression techniques and the test statistic can be
solution to an eigenvalue problem.
Thus, OLS is an efficient way to estimate each equation comprising (3.17) since the righthand side of each equation in the system co

growth and economic growth in Kenya. The cointegration analysis shows that the
different sectors of the economy were integrated of order one. This means that they were
nonstationary but linked by common stochastic trend and as such moved together over the

IGDPt-1
SGDPt-1
0.234*
0.416
Notes: *, *,* indicates statistical significance at the 10%, 5%, 1% level, respectively.
Source: Estimated by author.
The existence of one-way short-run causality between agricultural growth and economic
growth is consistent w