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Foreign direct investment into agriculture: does it crowd-out domestic investment?

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  • Justice Gameli Djokoto

Abstract

This study contributes to the debate on whether foreign direct investment crowd-in or crowd-out domestic investment by examining the short run and long run crowding effects of foreign direct investment (FDI) on domestic investment (DI) in the agricultural economy, using a cross-section of 64 countries from 1997 to 2016. In the short run, FDI has no discernible effect on DI in developing and transition economies’ agriculture. For developed economies, however, there is a crowd-out effect. Overall, is a crowding-in effect in the short run. A crowding-out effect was observed for developed countries whilst a crowding-in effect was observed for developed and economies in transition. Overall, the long-run effect is “no effect”. Improving the investment environment regarding regulatory and administrative processes as well as the absorptive capacity of the host country are recommended.

Suggested Citation

  • Justice Gameli Djokoto, 2021. "Foreign direct investment into agriculture: does it crowd-out domestic investment?," Agrekon, Taylor & Francis Journals, vol. 60(2), pages 176-191, April.
    • Handle: RePEc:taf:ragrxx:v:60:y:2021:i:2:p:176-191
    DOI: 10.1080/03031853.2021.1920437
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    Cited by:

    1. Zhizhong Liu & Guangyue Liu & Xu Han & Yingna Chen, 2022. "Green Technology of Foreign Direct Investment on Public Health: Evidence from China," Sustainability, MDPI, vol. 14(20), pages 1-16, October.
    2. Mirela Stoian & Raluca Andreea Ion & Vlad Constantin Turcea & Ionut Catalin Nica & Catalin Gheorghe Zemeleaga, 2022. "The Influence of Governmental Agricultural R&D Expenditure on Farmers’ Income—Disparities between EU Member States," Sustainability, MDPI, vol. 14(17), pages 1-14, August.
    3. Marian Catalin Voica & Mirela Panait & Eglantina Hysa & Arjona Cela & Otilia Manta, 2021. "Foreign Direct Investment and Trade—Between Complementarity and Substitution. Evidence from European Union Countries," JRFM, MDPI, vol. 14(11), pages 1-16, November.

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