Assessing the dynamic of economic relations between Kenya and South Korea

Abstract

Bilateral Investment Treaties provide foreign investors with legal protections, including safeguards against expropriation, fair and equitable treatment, and investor–state dispute settlement mechanisms. These protections are intended to reduce investment risks and promote Foreign Direct Investment. However, despite the legal framework governing investment, Korean investment in Kenya remains limited and concentrated in selected initiatives rather than broad-based industrial development. This study examined the dynamics of economic relations between Kenya and South Korea, focusing on bilateral trade, foreign direct investment, technology transfer, diplomatic cooperation, and the contribution of Bilateral Investment Treaties to economic engagement. The study was guided by economic liberalism theory and employed a descriptive research design. Conducted in Kenya and South Korea, the study used purposive sampling to target government officials from Kenya’s Ministry of Foreign Affairs and Ministry of Trade, Investment and Industry, as well as representatives of the Embassy of the Republic of Korea in Kenya and the Kenyan Embassy in South Korea. Quantitative and qualitative approaches were used to analyse the data. The findings indicate that 56.6% of traders agreed that bilateral trade had increased over the preceding decade, while 13.8% disagreed. However, only 14.5% considered Kenya’s exports to South Korea substantial, whereas 58.9% disagreed. Similarly, only 17.5% regarded South Korea as a major investor in Kenya, although 45.1% perceived Korean Foreign Direct Investment as growing. Furthermore, 67.7% disagreed that the bilateral trade balance favoured Kenya, and 36.0% disagreed that trade had diversified across sectors. Nevertheless, 47.8% acknowledged technology transfer benefits from Korean investments. Regarding the investment environment, 52.2% disagreed that Korean businesses faced few regulatory barriers, while 52.5% agreed that diplomatic relations supported economic cooperation. Only 24.6% reported regular bilateral meetings. Although 54.2% believed Bilateral Investment Treaties had contributed to increased Korean Foreign Direct Investment inflows, 40.7% considered South Korea an important partner for achieving Kenya’s Vision 2030.The study concludes that Kenya–South Korea economic relations have expanded, but the perceived benefits remain uneven. Increased trade and reported technology transfer have not translated into substantial Kenyan exports, a favourable trade balance, or broad-based sectoral diversification. Although Bilateral Investment Treaties are perceived to support investment, their contribution to inclusive economic transformation remains limited. The study recommends establishing a Kenya–South Korea Export Acceleration Programme involving relevant public-sector institutions, including the Kenya Plant Health Inspectorate Service and the Kenya Bureau of Standards, to address regulatory and market-access barriers, strengthen export competitiveness, diversify traded products, and improve the distribution of bilateral economic benefits.