Government Signs $198m Deal with China to Build New Freetown International Airport
This article addresses the bilateral agreement between China and Sierra Leone for the building of a new international airport. This is important for the development and growth of Sierra Leone because the current Lungi International Airport lacks accessibility and safety. The hassle of reaching Freetown—the capital city—is unappealing to tourists and investors whom the country is trying desperately to attract. While the China Railway International Company is building the new airport, Sierra Leone will embark on an infrastructural development project to improve the Lungi airport. Together, the Chinese and Sierra Leoneans are working together for the development of the West African Nation.
Improvements and the building of new infrastructure is one of the advantages associated with Foreign Direct Investment (FDI). Improvements in infrastructure lead to greater economic development and growth. For one, this airport leads to better transport of goods and services. When Sierra Leone has access to foreign goods, which are usually cheaper, the citizens will have greater access to goods that will improve their standard of living. Also, by being also to export more goods internationally, the country’s GDP has the ability to grow, thus contributing to economic growth and stability as the country becomes wealthier. After substantial economic growth the country may make profits from tourism because tourists will be more inclined to travel somewhere that seems safe (because of the newer technology). Any increase in profits leads to economic growth because the GDP is growing. With these new-found profits, the government will have money to invest in healthcare and educational programs, as well as new infrastructural projects, thus leading to economic development. China also prompted the government of Sierra Leone to invest in their country. By fixing up the existing international airport, the government shows its citizens and other nations that they are serious in re-branding their image both within and out of the country. What is now seen as a stable government means foreign investors will feel more secure in investing in Sierra Leone. This will lead to economic growth and development through profits. Lastly, more countries will be able to invest in Sierra Leone. Before, transportation into Sierra Leone was a barrier for investors to enter the country and build new companies or buy existing ones. Now that it is open to foreigners, countries can access the resources with greater ease and use them to make profits for themselves and Sierra Leone.
Another advantage of this Chinese project is that they are showing other countries that Sierra Leone is successfully putting itself back on its feet. This will attract more multinational corporations (MNCs). The more MNCs investing in Sierra Leone, the more money the government will have from tax revenue to spend on improvements in healthcare and education as well as infrastructural projects.
There will be economic growth in the short run by increasing aggregate demand in the host economy. Building an airport requires a lot of resources, such as iron ore, of which Sierra Leone has a lot. Economic growth in the long run will be through the increase in the stock of capital which raises the productivity of labor and leads to higher incomes. This will contribute to economic development because the nations’ people will be better off, and the increase in productivity leads to economic growth.
Improvements and the building of new infrastructure is one of the advantages associated with Foreign Direct Investment (FDI). Improvements in infrastructure lead to greater economic development and growth. For one, this airport leads to better transport of goods and services. When Sierra Leone has access to foreign goods, which are usually cheaper, the citizens will have greater access to goods that will improve their standard of living. Also, by being also to export more goods internationally, the country’s GDP has the ability to grow, thus contributing to economic growth and stability as the country becomes wealthier. After substantial economic growth the country may make profits from tourism because tourists will be more inclined to travel somewhere that seems safe (because of the newer technology). Any increase in profits leads to economic growth because the GDP is growing. With these new-found profits, the government will have money to invest in healthcare and educational programs, as well as new infrastructural projects, thus leading to economic development. China also prompted the government of Sierra Leone to invest in their country. By fixing up the existing international airport, the government shows its citizens and other nations that they are serious in re-branding their image both within and out of the country. What is now seen as a stable government means foreign investors will feel more secure in investing in Sierra Leone. This will lead to economic growth and development through profits. Lastly, more countries will be able to invest in Sierra Leone. Before, transportation into Sierra Leone was a barrier for investors to enter the country and build new companies or buy existing ones. Now that it is open to foreigners, countries can access the resources with greater ease and use them to make profits for themselves and Sierra Leone.
Another advantage of this Chinese project is that they are showing other countries that Sierra Leone is successfully putting itself back on its feet. This will attract more multinational corporations (MNCs). The more MNCs investing in Sierra Leone, the more money the government will have from tax revenue to spend on improvements in healthcare and education as well as infrastructural projects.
There will be economic growth in the short run by increasing aggregate demand in the host economy. Building an airport requires a lot of resources, such as iron ore, of which Sierra Leone has a lot. Economic growth in the long run will be through the increase in the stock of capital which raises the productivity of labor and leads to higher incomes. This will contribute to economic development because the nations’ people will be better off, and the increase in productivity leads to economic growth.
As shown by the graph, an increase in aggregate demand is good in the short run because it increases the real output, and therefore economic growth in Sierra Leone. But, if the demand is not matched with an increase in aggregate supply, prices will begin to rise creating an inflationary gap, which hurts economic development because the citizens, who are mainly poor, will not be able to afford the goods and services they need to survive.
The only downfall is that Sierra Leone desperately wants FDI in their country. So, they may lower their corporate tax rate in order to attract MNCs. This reduces the tax revenue the government will collect for investment in their country, reducing the possibility for economic development. But, the investors do contribute to economic growth, again with the raising of the GDP. Hopefully the positive effects of the FDI would outweigh the possible problems associating with owering the corporate tax rate.
The only downfall is that Sierra Leone desperately wants FDI in their country. So, they may lower their corporate tax rate in order to attract MNCs. This reduces the tax revenue the government will collect for investment in their country, reducing the possibility for economic development. But, the investors do contribute to economic growth, again with the raising of the GDP. Hopefully the positive effects of the FDI would outweigh the possible problems associating with owering the corporate tax rate.