This paper explores a political economy perspective as an alternative explanation to the illicit financial outflows for Kenya. It attempts to address two specific questions on why has Kenya continued to be characterized by corruption and debt fuelled capital outflows, although these stifled its economic development. It also attempts to find out if the outflows are a result of weaknesses in political institutions that do not constrain the powers of the executive. The paper reveals that increased arbitrary executive powers are positively associated with illicit financial outflows. That is, in the Kenyan context, prevailing weaknesses in the political institutions do matter for illicit financial flows (rent extraction). This finding is robust to the constraints on the executive from Polity IV Indicators as an alternative indicator of institutions.
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