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Market adaptability, industrial divergence, and the politics of liberalization in the Kenyan and Ugandan coffee industries Damianopoulos, Richard Anthony

Abstract

This study explains market adaptability, industrial divergence, and liberalization in the Kenyan and Ugandan coffee industries by addressing two fundamental questions: is liberalization responsible for divergence in the coffee sectors of Kenya and Uganda and; moreover, why has Uganda liberalized while Kenya has not? It will be demonstrated that liberalization is a major factor responsible for industry divergence and that, from the colonial period to the present, socio-political variables have been the primary force driving the decision of the domestic bourgeoisie to liberalize in Uganda and the failure to do so in Kenya. It is argued that socio-political variables act, by influencing the domestic bourgeoisie, as change agents that determine Kenya and Uganda's path choice of liberalization and continuation of an illiberal status quo respectively. This study assumes that states have full knowledge of international market signals. Looking at the case of the domestic coffee industries in Kenya and Uganda, Kenya has opted for continuation of the illiberal status quo whereas Uganda has opted for liberalization. This particular path choice occurred because it was perceived as beneficial by the Ugandan domestic bourgeoisie to adapt to the global coffee economy by liberalizing domestic industry whereas the Kenyan domestic bourgeoisie perceived the maintenance of the status quo as beneficial, even at the expense of generating sub-optimal economic outcomes for the domestic coffee industry. The impetus behind both path choices is socio-political, involving the pursuit of defined elite interests in the context of a historical dialectic between competing foci of power.

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