Abstract
Foreign direct investment (FDI) is considered in the literature as an essential driver of economic growth. This paper aims to investigate the impact of FDI on economic growth of Sierra Leone economy. As a whole, the period under consideration is a thirty-seven year period spanning from 1980 to 2016. Most researchers conclude that there is a positive impact of FDI on Economic Growth of a nation’s economy, but in this paper, we discovered that FDI has no relationship with economic growth in Sierra Leone. Empirical methods were used to analyze data and results are based on regression analysis conducted from available data. This paper ascertains that FDI (stock) inflow in Sierra Leone has no impact on the economic growth of the nation.
Highlights
Most researchers conclude that there is a positive impact of Foreign direct investment (FDI) on Economic Growth of a nation’s economy, but in this paper, we discovered that FDI has no relationship with economic growth in Sierra Leone
In recent years Sierra Leone has depended on foreign aid to finance its economic activities and national budget deficits, though it has a vast deposit of minerals and fertile land for agricultural purposes [3]
We might be faced with the question, why there is a negative relationship between FDI and economic growth in Sierra Leone
Summary
Sierra Leone is a developing country that depends on foreign direct investment and foreign aid to support economic activities, even when the country has vast deposits of minerals like iron ore, rutile, diamonds and vast fertile land. The role of FDI in the development of multinational and domestic or local industries improvement for export promotion and employment creation cannot be overemphasized in poor and developing countries with a vast deposit of minerals like Sierra Leone. In recent years Sierra Leone has depended on foreign aid to finance its economic activities and national budget deficits, though it has a vast deposit of minerals and fertile land for agricultural purposes [3]
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