The Impact Of Foreign Direct Investment On Economic Growth Of Liberia 1980-2013

Abstract

Attracting foreign direct investment (FDI) has been critical to development agenda of many African countries due to its alleged benefits to economic growth. This study assessed the impact of FDI on economic growth in Liberia in the last thirty years using an economic model based on multivariate statistical analysis of secondary economic data captured from various government sources by the World Bank. The analysis utilized Gould's 2012 study of the correlation between dollarization and monetary policy in Liberia to test this hypothesis using regression analysis, standard deviation, Chi Square test, and ANOVA calculations. It was found that FDI has a positive impact on the economy. However, the extent to which that positive impact contributes to social development and the intensity of that positive impact is dependent on good governance. These findings contribute to an understanding of the possible positive relationship between FDI and economic growth within the context of Liberia. It supports further studies that enhance economic growth by contributing to the understanding of how foreign private capital investments in the country have had impacts.