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Foreign direct investment and trade in agro-food global value chains

Author

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  • Jibran J. Punthakey

    (OECD)

Abstract

Foreign direct investment (FDI) and trade are driving forces in agro-food global value chains (GVCs), allowing companies to spread their activities across countries in complex production chains. This study explores the landscape of FDI in the agriculture and food sectors, using a novel database of mergers and acquisitions (M&As) covering the period 1997-2017. The study finds that FDI plays an important role in driving participation in agro-food GVCs, underscoring the close interdependencies between FDI, trade, and the various other channels that multinational enterprises (MNEs) use to engage with GVCs. The results from a survey of agro-food MNEs suggest that FDI decisions are underpinned by a diverse range of strategic motivations that go beyond commercial considerations and market-related factors. In particular, open, transparent and predictable trade and investment policies can have a strong positive influence on agro-food FDI. The study also highlights the importance of a broader set of policy areas, including dynamic agricultural innovation systems, policies to support supply chain linkages, and strong and effective laws governing responsible business conduct.

Suggested Citation

  • Jibran J. Punthakey, 2020. "Foreign direct investment and trade in agro-food global value chains," OECD Food, Agriculture and Fisheries Papers 142, OECD Publishing.
    • Handle: RePEc:oec:agraaa:142-en
    DOI: 10.1787/993f0fdc-en
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    Cited by:

    1. Djokoto, Justice Gameli & Gidiglo, Ferguson K. & Srofenyo , Francis Y. & Agyeiwaa-Afrane, Akua, 2022. "Human Development Effects of Food Manufacturing Foreign Direct Investment," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 10(1), January.
    2. Zaneta Kubik, 2023. "The role of agricultural sector performance in attracting foreign direct investment in the food and beverages sector. Evidence from planned investments in Africa," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 875-903, July.
    3. Qamruzzaman, Md, 2022. "Nexus between renewable energy, foreign direct investment, and agro-productivity: The mediating role of carbon emission," Renewable Energy, Elsevier, vol. 184(C), pages 526-540.
    4. Linus Nyiwul & Niraj P. Koirala, 2022. "Role of foreign direct investments in agriculture, forestry and fishing in developing countries," Future Business Journal, Springer, vol. 8(1), pages 1-12, December.
    5. Pronti, A. & Zegarra, E. & Vicario, D. Rey & Graves, A., 2024. "Global exports draining local water resources: Land concentration, food exports and water grabbing in the Ica Valley (Peru)," World Development, Elsevier, vol. 177(C).
    6. Djokoto, Justice Gameli, 2021. "Foreign direct investment into agriculture: does it crowd-out domestic investment?," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 60(2), May.

    More about this item

    Keywords

    Agriculture; FDI; GVCs; M&As; Mergers and Acquisitions; MNEs; Multinational Enterprises;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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