SOFT(i)ssues: Trade, Economics, Sustainable Economic Development and Good Governance

Besides the provision of security for their citizens, wrapped around ‘national security,’ nations exist to facilitate the provision of welfare to citizens. Economic activities have dual purposes: from a mercantilist perspective, economic activity gives the government funds to advance domestic and foreign policy interests including security, as an expression of governmental power. Traditional sources of power include the military (which is funded by taxes collected from citizens) and the economy. Governments have internal and external incentives to have robust economies so that citizens are prosperous, and to protect them from erosion or competition with others, despite the reality of trade making everyone better. Governments do not always determine their economic conditions: some of these are determined by external factors, e.g., the 1973 oil crisis, or the collapse of the prices of raw materials in the 1970s (hence core-periphery and dependency). Other economies have been driven by colonialism or another invasion. Kenya’s lot was with the former: colonized for its natural resources (and climate) it was locked onto a path of primary producers, and at independence, found global trade organizations already formed (e.g., GATT). Since, it has been forced to borrow and beg, falling prey to the IMF-World Bank-originating conditionalities of the Washington Consensus, Structural Adjustment Programs (SAPs) and Poverty Reduction and Growth Facility (PRGF). While these worked very poorly, they had an impact on Kenya, including trade liberalization, market, and political reforms. Kenya’s trade partners are primarily East African and the EU, and even in new agreements, the country has continued to experience the distorted conditions that have kept its economy small. Further, it has had to rely on foreign aid, given the meager FDI it attracts (often, negatively influenced by internal political disagreements). This chapter demonstrates that, while countries like Kenya are sovereign, their claim to sovereignty does not stand up to scrutiny when they have to borrow and beg, and thus, have to occasionally plead with donors to obtain funding, compromising their sovereignty and affecting foreign policy.