Avoiding the Dutch disease: Political settlement and institutional development in Kenya

Abstract

Petroleum is undoubtedly one of the most valuable commodities in the world with an annual production worth billions of dollars, and an attempt to relate it to the slow economic performance of a country may seem far-fetched. Studies on sub-Saharan countries that produce oil have often viewed the country’s ability to govern oil from an institutionalist lens. This Thesis aims to explore the governance and management of oil resources in African states since this is the focal point between the oil-rich countries and the international community. By using a political settlement framework, I seek to further the “resource curse” discourse by challenging the new institutionalist theory which fails to adequately address the Dutch disease problem. I compare the political settlement between Ghana and Kenya and explore the dynamics of power and politics and how this relationship shapes the functionality of institutions. My analysis of the current political settlement in Kenya that is dynamic in nature, suggests that acceptable levels of elite commitment and bureaucratic capability are unlikely to be reached hence making Kenya prone to the Dutch Disease.