Kenya's economy took a battering from its post-election violence in early 2008, when some 1,500 people were killed and economic growth dropped to 1.6 percent from 7.1 percent in 2007.
Kenya is due to vote on a new charter on Aug. 4, which would curb broad presidential powers and strengthen civil liberties. It is seen as the center-piece of reforms aimed at healing the ethnic divisions that dominate Kenyan politics.
"When these reforms take place you will find a completely different atmosphere about investment in this country," Biden told reporters in Nairobi during his four-day visit to Kenya.
"Americans want to do business here, they want to travel here and with the right climate they will come," he said.
Guarantees of a new charter were at the heart of the power-sharing deal that ended weeks of bloodshed in 2008.
"Putting in place a new constitution and strengthening (Kenya's) democratic institutions and rule of law will further open the door to major American development programs ... and will bring about reinvestment by American corporations."
Biden said investment by American businesses would pave the way for international business interests from around the world.
"When we invest it has a tendency to generate additional investment from other parts of the world... Reform will also reinvigorate tourism," he said.
Tourism was one the sectors hardest hit by the post-election crisis — after the best year in its history in 2007 — when earnings fell 19.4 percent as wary travelers stayed away.
In October the United States banned Kenya's Attorney General Amos Wako from traveling to the United States, citing his obstruction of the fight against corruption, and said it was considering similar action against three more prominent Kenyans.
Watchdog Transparency International ranks Kenya as the most corrupt nation in east Africa.
Biden said Kenya remained a key ally in promoting security in a troubled region, pointing to the ongoing violence in Somalia that has killed at least 21,000 in the last three years, and south Sudan, which will vote on its future early next year.
"We recognize that Kenya's long-term stability and development are tied to the region's security and development.
"The United States supports Kenya's effort to secure the border (with Somalia) in the face of very real threats from those who wish to spread chaos," Biden said.
Last month Al-Shabab fighters crossed into Kenya from south Somalia while pursuing rivals from the Somali Hizbul Islam group. They wounded five Kenyans and kidnapped three others.
Huge swathes of southern Somalia are under the control of the Al-Qaeda-linked rebels.
Kenyan President Mwai Kibaki, after meeting with Biden, said he had asked the United States to take a lead on Somalia.
"We have asked the US government to provide leadership to forge a concerted international effort to stabilize Somalia."
The two leaders stressed the importance of respecting the result of south Sudan's referendum on independence, which is seen as a potential flash point in the region.
