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International Journal of Academic Research in Business and Social Sciences

Open Access Journal

ISSN: 2222-6990

Environmental Pollution and Economic Growth Determinants in Foreign Direct Investment Inflows: The Case for Sub-Saharan Sierra Leone

Mahmud Ahmad Mansaray

http://dx.doi.org/10.6007/IJARBSS/v13-i12/19883

Open access

The primary objective of the present research was the examination of environmental pollution, economic growth, and supplementary selected macroeconomic elements as determinants of foreign direct investment inflows into Sub-Saharan Sierra Leone for the post-conflict period, 2002-2020, and whether the association between the determinants and foreign direct investment is long-term and short-term. The research methodology was quantitative, and the dataset was time series with 76 observations and 10 variables. Using the AR(2) model, the findings indicated the lags of foreign direct investment, gross fixed capital formation, carbon dioxide, trade, and population growth were significant determinants of foreign direct investment inflows. Furthermore, applying the Phillips-Ouliaris cointegration model, the results indicated a statistically significant long-run association between foreign direct investment and, at least, one determinant (Rho = -39.458, Tau = -5.024, p < .05). Additionally, the error correction model (errorECM1) applied to explore the short-run deviation from the long-run had the expected sign, and was statistically significant (?errorECM1 = -.524, SE = .158, t = -3.31, p = .002), representing a speedy conversion movement to long-run equilibrium of about 52.4% annually. Nonetheless, the research restricted itself to 19 post-conflict years (2002-2020), which may be inadequate to recognize the comprehensive determinant of foreign direct investment inflows. Succeeding studies must embrace additional years, including pre-conflict periods, to recognize the comprehensive determinants of foreign direct investment inflows into Sub-Saharan Sierra Leone.