Role of foreign direct investments in agriculture, forestry and fishing in developing countries
Tóm tắt
The primary sector is vital for growth and sustainable development in emerging countries. The combined effects of COVID-19 and geopolitical uncertainty on capital flows are likely to have profound impacts on many developing countries. In particular, decreased capital inflows into agriculture will negatively affect food security and growth. However, there remain limited literature on the role of capital inflows in this sector. In this paper, we examine the role that foreign capital inflows play in the development of the agricultural, forestry and fishing sectors in developing countries. Specifically, we use the panel vector autoregression approach that accounts for endogeneity. Using data from sixteen developing economies, we find that there exists bidirectional causality between foreign direct investments in agriculture, forestry and fishing and value added in these sectors. These bidirectional relationships reflect a cyclical effect between FDI and value added in the agriculture, forestry and fishing. The effect of FDI on value added in agriculture, forestry and fishing remains positive for up to five years in our model. This implies FDI has a medium- to long-term positive impact on value added in agriculture, forestry and fishing. The implication of this result is that countries with currently high FDI transaction costs or that have a generally less conducive investment environment can improve agriculture by eliminating these obstacles. This is because FDIs can lead to improved technologies and technical expertise, practices, management and other systems that benefit the host countries.
Tài liệu tham khảo
Abrigo M, Love I (2016) Estimation of panel vector autoregression in Stata. Stata J 16(3):778–804
Alam A, Bagchi PK (2011) Supply chain capability as a determinant of FDI. Multinatl Bus Rev 19(3):229–249. https://doi.org/10.1108/15253
Amendolagine V, Presbitero AF, Rabellotti R, Sanfilippo M (2019) Local sourcing in developing countries: the role of foreign direct investments and global value chains. World Dev 113:73–88. https://doi.org/10.1016/j.worlddev.2018.08.010
Amendolagine V, Boly A, Coniglio N, Prota F, Seric A (2013) FDI and local linkages in developing countries: evidence from sub-Saharan countries. World Dev 50:41–56. https://doi.org/10.1016/j.worlddev.2013.05.001
Awunyo-Vitor D, Sackey RA (2018) Agricultural sector foreign direct investment and economic growth in Ghana. J Innov Entrep 7:15. https://doi.org/10.1186/s13731-018-0094-3
Barkat K, Alsamara M (2019) The impact of foreign agricultural aid and total foreign aid on agricultural output in African countries: new evidence from panel data analysis. S Afr J Econ 87:354–375. https://doi.org/10.1111/saje.12224
Behnassi M, El Haiba M (2022) Implications of the Russia–Ukraine war for global food security. Nat Hum Behav 6:754–755. https://doi.org/10.1038/s41562-022-01391-x
Ben Slimane M, Huchet-Bourdon M, Zitouna H (2016) The role of sectoral FDI in promoting agricultural production and improving food security. Int Econ 145:50–65. https://doi.org/10.1016/j.inteco.2015.06.001
Borgomeo E, Santos N (2019) Towards a new generation of policies and investments in agricultural water in the Arab region: fertile ground for innovation. FAO, Rome, International Water Management Institute (IWMI), Colombo. p 124. https://www.fao.org/documents/card/en/c/ca4445en/
Castañeda A, Doan D, Newhouse D, Nguyen MC, Uematsu H, Azevedo JP (2016) Who are the poor in the developing world? Policy research working papers. October 2016. https://doi.org/10.1596/1813-9450-7844
Dewbre J, Thompson W, Dewbre J (2007) Consistency or conflict in OECD agricultural trade and aid policies. Am J Agr Econ 89(5):1161–1167. https://doi.org/10.1111/j.1467-8276.2007.01077.x
Dhahri S, Omri A (2020) Does foreign capital really matter for the host country agricultural production? Evidence from developing countries. Rev World Econ 156:153–181. https://doi.org/10.1007/s10290-019-00361-2
Dhahri S, Omri A (2020) Foreign capital towards SDGs 1 & 2—ending poverty and hunger: the role of agricultural production. Struct Chang Econ Dyn 53:208–221. https://doi.org/10.1016/j.strueco.2020.02.004
Dumas P, Hanson C, Ranganathan J, Searchinger T, Waite R (2019) Creating a sustainable food future. World Resources Institute, Washington, ISBN 9781569739631. https://research.wri.org/wrr-food
Edeh CE, Eze CG, Ugwuanyi SO (2020) Impact of foreign direct investment on the agricultural sector in Nigeria (1981–2017). Afr Dev Rev 2020(32):551–564. https://doi.org/10.1111/afdr.12460
FAO (2022) The importance of Ukraine and the Russian Federation for global agricultural markets and the risks associated with the current conflict. Informational Note, Food and Agricultural Organization, Rome
FAO (2021) World food and agriculture—statistical yearbook 2021. Rome. https://doi.org/10.4060/cb4477en
Fernandes AM, Kee HL (2021) Women empowerment, supply chain linkages and FDI: evidence from Bangladesh. Transnatl Corp 27(3):115–132. https://doi.org/10.18356/2076099x-27-3-8
Firebaugh G, Beck FD (1994) Does economic growth benefit the masses? Growth, dependence, and welfare in the third world. Am Sociol Rev. https://doi.org/10.2307/2096441
Furtan WH, Holzman JJ (2004) The effect of FDI on agriculture and food trade: an empirical analysis. Agriculture and Rural Working Paper Series. Working Paper No. 68
Gohou G, Soumaré I (2012) Does foreign direct investment reduce poverty in Africa and are there regional differences? World Dev 40(1):75–95. https://doi.org/10.1016/j.worlddev.2011.05.014
Guenette JD, Kenworthy PG, Wheeler CM (2022). Implications of the War in Ukraine for the Global Economy. EFI Policy Note 3. World Bank, Washington. https://openknowledge.worldbank.org/handle/10986/37372
Granger CWJ (1969) Investigating causal relations by econometric models and cross-spectral methods. Econometrica 37:424–438
Hasan M, Rahman MN, Iqbal BA (2017) Corruption and FDI inflows: evidence from India and China. Mediterr J Soc Sci 8(4–1):173–182. https://doi.org/10.2478/mjss-2018-0088
Havemann T, Negra C, Werneck F (2020) Blended finance for agriculture: exploring the constraints and possibilities of combining financial instruments for sustainable transitions. Agric Hum Values 37:1281–1292. https://doi.org/10.1007/s10460-020-10131-8
Holtz-Eakin D, Newey W, Rosen H (1988) Estimating vector autoregressions with panel data. Econometrica 56(6):1371–1395
IMF (International Monetary Fund) (1993) Balance of payments manual 5th edition. International Monetary Fund, Washington
Iqbal BA, Rahman N, Elimimian J (2019) The future of global trade in the presence of the Sino-US trade war. Econom Polit Stud 7(2):217–231. https://doi.org/10.1080/20954816.2019.1595324
Jana SS, Sahu TN, Pandey KD (2019) Foreign direct investment and economic growth in india: a sector-specific analysis. Asia-Pacific J Manag Res Innov 15(1–2):53–67. https://doi.org/10.1177/2319510X19849731
Jenkins JC, Scanlan SJ (2001) Food security in less developed countries, 1970 to 1990. Am Sociol Rev. https://doi.org/10.2307/3088955
Kennes DJ, Taylor S, Fonseca B (2022) The Russia–Ukraine war’s impact on global fertilizer markets. RaboResearch Food and Agribusiness, Rabobank. https://research.rabobank.com/far/en/sectors/farm-inputs/the-russia-ukraine-war-impact-on-global-fertilizer-markets.html
Kherallah MW, Beghin JC, Peterson EWF, Ruppel FJ (1994) Impacts of official development assistance on agricultural growth, savings and agricultural imports. Agric Econ 11(2–3):99–110. https://doi.org/10.1016/0169-5150(94)00008-5
Klimek A (2020) Determinants of foreign direct investment in advanced business services. Acta Oecon 70(3):407–421
Magombeyi MT, Odhiambo NM, Watson D (2018) FDI inflows and poverty reduction in Botswana: an empirical investigation. Cogent Econ Finance 6:1. https://doi.org/10.1080/23322039.2018.1480302
McArthur JW, Sachs JD (2019) Agriculture, aid, and economic growth in Africa. World Bank Econ Rev 33(1):1–20. https://doi.org/10.1093/wber/lhx029
Mihalache-O’Keef A, Li Q (2011) Modernization vs. dependency revisited: effects of foreign direct investment on food security in less developed countries. Int Stud Q 55(1):71–93. https://doi.org/10.1111/j.1468-2478.2010.00636.x
Norton GW, Ortiz J, Pardey PG (1992) The impact of foreign assistance on agricultural growth. Econ Dev Cult Change 40(4):775–786. https://doi.org/10.1086/451976
Nyiwul L (2021) COVID-19 regulatory responses and FDI in the United States: trends and implications for capital flows. Transnatl Corp Rev 13(2):156–173. https://doi.org/10.1080/19186444.2021.1934361
OECD/UNCDF (2020) Blended finance in the least developed countries 2020: supporting a resilient COVID-19 recovery. OECD Publishing, Paris. https://doi.org/10.1787/57620d04-en
Opoku EEO, Ibrahim M, Sare YA (2019) Foreign direct investment, sectoral effects and economic growth in Africa. Int Econ J 33(3):473–492. https://doi.org/10.1080/10168737.2019.1613440
Osendarp S, Verburg G, Bhutta Z, Black RE, de Pee S, Fabrizio C, Headey D, Heidkamp R, Laborde D, Ruel MT (2022) Act now before Ukraine war plunges millions into malnutrition. Nature 604:620–624. https://doi.org/10.1038/d41586-022-01076-5
Parker C (2022) Five countries hit hard by the grain crisis in Ukraine, Washington Post. https://www.washingtonpost.com/world/2022/06/15/ukraine-war-russia-grain-food-crisis-world-hunger/
Polak P, Masquelier F, Michalski G (2018) Towards treasury 4.0/the evolving role of corporate treasury management for 2020. Management 23(2):189–197. https://doi.org/10.30924/mjcmi/2018.23.2.189
Punthakey J (2020) Foreign direct investment and trade in agro-food global value chains. OECD Food, Agriculture and Fisheries Papers, No. 142, OECD Publishing, Paris. https://doi.org/10.1787/993f0fdc-en
Santangelo GD (2018) The impact of FDI in land in agriculture in developing countries on host country food security. J World Bus 53(1):75–84. https://doi.org/10.1016/j.jwb.2017.07.006
Srikanth M, Kishore B (2012) FDI and its impact on Indian economy: an empirical investigation. Foreign Trade Rev 46(4):3–17. https://doi.org/10.1177/0015732515120401
Stewart R, Langer L, Da Silva NR, Muchiri E, Zaranyika H, Erasmus Y, Randall N, Rafferty S, Korth M, Madinga N, de Wet T (2015) The effects of training, innovation and new technology on African smallholder farmers’ economic outcomes and food security: a systematic review. Campbell Syst Rev 11:1–224. https://doi.org/10.4073/csr.2015.16
Smith P, Bustamante M, Ahammad H, Clark H, Dong H, Elsiddig EA, Haberl H, Harper R, House J, Jafari M, Masera O, Mbow C, Ravindranath NH, Rice CW, Robledo Abad C, Romanovskaya A, Sperling F, Tubiello F (2014) Agriculture, forestry and other land use (AFOLU). In: Edenhofer O, Pichs-Madruga R, Sokona Y, Farahani E, Kadner S, Seyboth K, Adler A, Baum I, Brunner S, Eickemeier P, Kriemann B, Savolainen J, Schlömer S, von Stechow C, Zwickel T, Minx JC (eds) Climate change 2014: mitigation of climate change. Contribution of working group III to the fifth assessment report of the intergovernmental panel on climate change. Cambridge University Press, Cambridge
Tondl G, Fornero JA (2010) Sectoral productivity and spillover effects of FDI in Latin America (No. 53). FIW Working Paper
Townsend R (2015) Ending poverty and hunger by 2030: an agenda for the global food system. World Bank Group, Washington
UNCTAD (2018) The least developed countries report 2018. https://unctad.org/system/files/official-document/ldcr2018_en.pdf
Walkenhorst P (2000) Foreign direct investment, technological spillovers and the agricultural transition in Central Europe. Post-Communist Econ 12(1):61–75. https://doi.org/10.1080/14631370050002675
Wimberley DW (1991) Transnational corporate investment and food the third world: a cross-national analysis. Rural Sociol 56:406–431. https://doi.org/10.1111/j.1549-0831.1991.tb00441.x
Wimberley DW, Bello R (1992) Effects of foreign investment, exports, and economic growth on third world food consumption. Soc Forces 70(4):895–921. https://doi.org/10.1093/sf/70.4.895
WTO (2022) Trade statistics and outlook. Russia–Ukraine conflict puts fragile global trade recovery at risk. Press Release Press/902. https://www.wto.org/english/news_e/pres22_e/pr902_e.htm
World Bank (2020) Agriculture finance and agriculture insurance, Brief, October 8, 2020. https://www.worldbank.org/en/topic/financialsector/brief/agriculture-finance