Foreign Direct Investment forms one of the most important links between developing and industrial countries and increasingly among developing countries. Like trade, it provides an important channel for global integration and technology transfer. Kenya faces a big challenge in attracting and sustaining foreign direct investment at levels that allow domestic investment to take advantage of benefits associated with capital inflows. The study therefore sought to conduct an empirical investigation on the determinants of foreign direct investment in Kenya. The theoretical framework is based on the concept of institutional FDI fitness theory, developed by SaskiaWilhelms. The study used data over 1980-2013 periods, partly because after independence (1963), marked the beginning of the development process. The results were interpreted based on the Ordinary least square model (OLS). The estimated linear regression model revealed that, economic growth rate is the most significant determinant of foreign direct investment inflows in Kenya. Other variables that were significant determinant of FDI inflows included open economies, inflation and exchange rates.
Direct investment,Kenya,Inflows,Global integration.