THE EFFECT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN SIERRA LEONE

Автори

  • Alpha Junior Kougbaka Doctoral Candidate, Institute of Geography and Development Studies, Faculty of Environmental Science, Njala University, Sierra Leone
  • Robert Dauda Korsu Director, Research and Statistics Department, Bank of Sierra Leone, Sierra Leone, and Associate Lecturer, Department of Economics, Njala University, Sierra Leone

ДОИ:

https://doi.org/10.46827/ejefr.v9i5.2060

Клучни зборови:

foreign direct investment, economic growth, investment and stationarity test

Апстракт

The paper investigates the effect of foreign direct investment on economic growth in Sierra Leone. A model of real GDP growth was estimated with annual data from 1980 to 2022. Tests for stationarity were done in order to avoid spurious regression by using the Dickey-Fuller GLS test and a battery of structural break tests. An auto-regressive distributed lag model (ARDL) was estimated using the Ordinary Least Squares, following the transformation of non-stationary variables to obtain stationarity, which was the case for terms of trade only. A parsimonious model was then obtained from an over-parameterized model. The model results show that foreign direct investment (FDI) has a significant positive effect on economic growth, with a one percentage point of GDP increase in foreign direct investment increasing real GDP growth by 0.49 percentage point in the same year. Hence, policies that encourage more foreign direct investment in Sierra Leone are to be strengthened. Also, for enhanced poverty reduction, tilting foreign direct investment towards the agricultural sector to enhance agricultural transformation is imperative for a more productive agricultural sector, as a large chunk of Sierra Leone’s labor force, population, and the poor are in the rural areas, where agriculture is the predominant activity.

 

JEL: F21, F43

 

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Биографии на авторите

  • Alpha Junior Kougbaka, Doctoral Candidate, Institute of Geography and Development Studies, Faculty of Environmental Science, Njala University, Sierra Leone

    Alpha Junior Kougbaka is a doctoral candidate in the Ph.D Programme in Development Studies, in the Institute of Geography and Development Studies Faculty of Environmental Sciences, Njala University, Sierra Leone. His research interests are Governance and Development, Public Policy and Administration and Human Capital and Skills Development. He has biased for Policy Analysis with Statistical Methods. He holds a Master’s degree in Public Administration, a Master’s degree in Education and a Bachelor’s degree in Education, from Njala University, Sierra Leone.

  • Robert Dauda Korsu, Director, Research and Statistics Department, Bank of Sierra Leone, Sierra Leone, and Associate Lecturer, Department of Economics, Njala University, Sierra Leone

    Robert Dauda Korsu is the Director of the Research and Statistics Department at the Bank of Sierra Leone and an Associate Lecturer at the Department of Economics, Njala University, Sierra Leone. He holds a PhD in Economics from the University of Ibadan, Nigeria, an M.Sc. (Econ) from Addis Ababa University, Ethiopia and a Bachelor’s degree with Honours in Economics from the University of Sierra Leone (Fourah Bay College). His research interests are Macroeconomic Policy, Monetary Economics, Applied Econometrics, and International Trade and Finance. He is a network member of the African Economic Research Consortium, based in Nairobi, Kenya, a life Fellow of the Economic Association of Sierra Leone and member of ResearchGate and Academia.edu

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Преземања

Објавено

2025-10-23

Издание

Том. 9 Бр. 5 (2025)

Секција

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