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.
KeywordsForeign Direct InvestmentManufacturing Sector in Sierra LeoneEconomic DevelopmentPrivate Investment
Okeke, R.C., Ezeabasili, V.N. and Nwakoby, C.N.I. (2014) Foreign Direct Investment and Economic Growth in Nigeria: An Empirical Evidence. International Journal of Innovative Research in Management, 3, 30-39.
Duramany-Lakkoh, E.K. (2020) The Effect of Fiscal Policy on Financial Sector Development in Sierra Leone: A Time Series Approach. International Journal of Development and Economic Sustainability, 8, 1-23.
Duramany-Lakkoh, E.K. (2021) A Foreign Aid and Economics Development Nexus: The Case of Sierra Leone: Foreign Aid in Sierra Leone, Economic Development in Sierra Leone, Archives of Business Research, 9, 219-233.
Bermúdez-Lugo, O. (2016) The Mineral Industry of Sierra Leone. U.S. Geological Survey Minerals Yearbook—2013. USGS Science for a Changing World. https://s3-us-west-2.amazonaws.com/prd-wret/assets/palladium/production/mineral-pubs/country/2013/myb3-2013-sl.pdf
International Monetary Fund (2005) Balance of Payments Manual. 5th Edition, IMF, Washington DC. https://www.imf.org/en/Publications/Books/Issues/2016/12/30/Balance-of-Payments-Manual-157
Organisation for Economic Co-Operation and Development (1996) OEDC Benchmark Definition of Foreign Direct Investment. 3rd Edition, OEDC, Paris. https://www.oecd.org/daf/inv/investment-policy/2090148.pdf
Vernon, R. (1979) The Product Cycle Hypothesis in a New International Environment. Oxford Bulletin of Economics and Statistics, 41, 255-267. https://doi.org/10.1111/j.1468-0084.1979.mp41004002.x
Soubbotina, T.P. (2004) Beyond Economic Growth: An Introduction to Sustainable Development. 2nd Edition, World Bank, Washington DC. https://openknowledge.worldbank.org/handle/10986/14865 https://doi.org/10.1596/0-8213-5933-9
Domar, E.D. (1946) Capital Expansion, Rate of Growth, and Employment. Econometrica, 14, 137-147. https://doi.org/10.2307/1905364
Piętak, L. (2014) Review of Theories and Models of Economic Growth. Comparative Economic Research, 17, 45-60. https://doi.org/10.2478/cer-2014-0003
Heinz, D.K. and Neri, S. (2014) Revisiting Classical Economics, Studies in Long-Period Analysis. Routledge, London.
Richardo, D. (1951) On the Principles of Political Economics and Taxation Vol. I. Cambridge University Press, Cambridge.
Malthurs, T.R. (1925) Prawo Ludnosci, Warszawa. In: Malthus, T.R., Ed., An Essay on the Principles of Population, Macmillan, London.
Max, K. (1938) Capital: A Critique of Political Economy (Volume I). Progress Publishers, Moscow. https://www.marxists.org/archive/marx/works/download/pdf/Capital-Volume-I.pdf
Schumpeter, J.A. (1934) The Theory of Economic Development: An Inquiry into Profits, Capital, Credits, Interest, and the Business Cycle. Transaction Publishers, Piscataway.
Rostow, W.W. (1960) The Stages of Economic Growth: A Non-Communist Manifesto. Cambridge University Press, Cambridge.
Vo, X.V. and Batten, J.A. (2006) The Importance of Social Factors When Assessing the Impact of Foreign Direct Investment on Economic Growth. Institute for International Integration Studies. IIIS Discussion Paper No. 179. https://doi.org/10.2139/ssrn.945151 https://www.tcd.ie/triss/assets/PDFs/iiis/iiisdp179.pdf
Mohammaed, A.A. and Mahmoud, K.A. (2013) Foreign Direct Investment and Economic Growth Literature Review from 1994 to 2012. Procedia—Social and Behavioural Science, 129, 206-213. https://doi.org/10.1016/j.sbspro.2014.03.668
Duramany-Lakkoh, E.K., Jalloh, M.S. and Jalloh, A. (2021) Foreign Direct Investment and Manufacturing Sector in Sierra Leone: A Vector Auto-Regression Analysis Approach. Journal of Mathematical Finance, 11, 620-650. https://doi.org/10.4236/jmf.2021.114034
Elboiashi, H.A. (2011) The Effect of Foreign Direct Investment and Other Foreign Capital Inflow on Growth and Investment in Developing Country. Ph.D. Thesis, Department of Economics, University of Glasgow, Glasgow. https://theses.gla.ac.uk/3026/1/2011elboiashiphd.pdf
Landry, C. (2015) The Impact of Foreign Direct Investment on the Economic Growth of Cameroon. Master’s Thesis, Institute of Graduate Studies and Research, Eastern Mediterranean University, Gazimağusa.
Semwanga, J.P. (2011) Foreign Direct Investment and Economic Growth: The Case of Uganda (1970-2007) Master’s Thesis, Makerere University, Kampala. http://makir.mak.ac.ug/bitstream/handle/10570/2364/semwanga-cobams-masters.pdf% 3Bjsessionid%3D049A171D4E519ED8B6D78BAA2A218662?sequence%3D3
Ovat, O.O. and Antakikam, A.E. (2018) Foreign Direct Investment And Economic Growth in Developing Countries: How Has Nigeria Fared. IOSR Journal of Economics and Finance, 9, 55-63.
Adeleke, K.M., Olowe, S.O. and Fasesin, O.O. (2014) Impact of Foreign Direct Investment on Nigeria Economic Growth. International Journal of Academic Research in Business and Social Sciences, 4, 234-242.
Nigh, D. (1986) Political Event and Foreign Direct Investment Decision: An Empirical Examination. Management Decision Economics, 7, 99-106. https://doi.org/10.1002/mde.4090070205
Mohnen, P. (2001) International R&D Spillovers and Economic Growth. In: Pohjola, M., Ed., Information Technology, Productivity and Economic Growth, Oxford University Press, New York, 50-71. https://doi.org/10.1093/acprof:oso/9780199243983.003.0003
Wang, M. (2009) Manufacturing FDI and Economic Growth: Evidence from Asian Economies. Applied Economics, 41, 991-1002. https://doi.org/10.1080/00036840601019059
Gui-Diby, S.L. (2014) Impact of Foreign Direct Investment on Economic Growth in Africa: Evidence from Three Decades of Panel Data Analyses. Research in Economics, 68, 248-256. https://doi.org/10.1016/j.rie.2014.04.003
Khaliq, A. and Noy, I. (2007) Foreign Direct Investment and Economic Growth: Empirical Evidence from Sectoral Date in Indonesia. Working Paper, Department of Economics, University of Hawaii at Manoa, Honolulu. https://economics.hawaii.edu/research/workingpapers/WP_07-26.pdf
Adewumi, S. (2016) The Impact of FDI on Economic Growth in Developing Countries: An African Experience. Master’s Thesis, Jönköping University, Jönköping. https://www.diva-portal.org/smash/get/diva2:4440/FULLTEXT01.pdf
Akinlo, A.E. (2004) Foreign Direct Investment and Economic Growth in Nigeria: An Empirical Investigation. Journal of Policy Modelling, 26, 627-639. https://doi.org/10.1016/j.jpolmod.2004.04.011
Chabe, L. (2015) The Impact of Foreign Direct Investment on the Economic Growth of Cameroon. Master’s Thesis, Eastern Mediterranean University, Gazimağusa. http://i-rep.emu.edu.tr:8080/jspui/bitstream/11129/2545/1/ChabeLandry.pdf
Bangura, A. (2010) Sierra Leone Economic Records 1961-2010. Ministry of Finance and Economic Development. https://www.theigc.org/wp-content/uploads/2014/08/Alimamy-Bangura-Sierra-Leones-economic-record.pdf
World Integrated Trade Solutions (2017) Sierra Leone Trade Indicators. https://wits.worldbank.org/CountryProfile/en/Country/SLE/Year/2017
World Bank Group (2017) World Development Indicators 2017. https://openknowledge.worldbank.org/handle/10986/26447
World Bank Group (2017) Doing Business Report: Measuring Business Regulations. https://www.doingbusiness.org/en/reports/global-reports/doing-business-2017
African Economic Outlook (2017) Entrepreneurship and Industrialisation. https://www.oecd.org/dev/african-economic-outlook-19991029.htm
Brima, S. (2015) Macroeconomic Determinants of Foreign Direct Investment in Sierra Leone: An Empirical Analysis. International Journal of Economics and Finance, 7, 123-133.
Alfaro, L., Chanda, A., Kalemli-Ozcan, S. and Sayek, S. (2006) How Does Foreign Direct Investment Promote Economic Growth? Exploring the Effects of Financial Markets on Linkages. NBER Working Paper 12522.
Juma, M.A. (2012) The Effect of Foreign Direct Investment on Growth in Sub-Saharan Africa. Amherst College, Amherst. https://www.amherst.edu/media/view/434456/original/Juma,%20Mary-Ann%20Thesis.pdf
Borensztein, E., Gregorio, J. and Lee, J.W. (1998) How Does Foreign Direct Investment Affect Economic Growth? Journal of International Economics, 45, 115-135. https://doi.org/10.1016/S0022-1996(97)00033-0
Alfaro, L., Chanda, A., Kalemli-Ozcan, S. and Sayek, S. (2004) FDI and Economic Growth: The Role of Local Financial Markets. Journal of International Economics, 64, 89-112. https://doi.org/10.1016/S0022-1996(03)00081-3
Abbas, Q., Salman, A., Nasir, A. S., Ullah, H.A. and Naseem, M.A. (2011) Impact of Foreign Direct Investment on Gross Domestic Product. Global Journal of Management and Business Research, 11, 34-40.