Growth and Rent Dissipation: the Case of Kenya

Poor growth performance in Kenya is rooted in the ruling elite's coalition-building to stay in power. To obtain loyal followers the public sector is over-manned. Dishonesty and rule-bending are allowed to develop within an administrative culture where politicians and top bureaucrats acquire private businesses and landholdings (straddling). Thus politics become coupled with corruption and particularistic business interests. We outline a stylized endogenous growth model to structure the discussion of why public sector surplus labour, corruption and straddling may be so harmful to economic growth in Kenya.