Divestment of foreign direct investment and domestic investment in developing countries agriculture

Abstract

Divestment of foreign direct investment has accompanied foreign direct investment. The literature on the interface of foreign direct investment and domestic investment in the agricultural sector is limited. None of these addressed the effect of agricultural foreign divestment on agricultural domestic investment. This paper filled this gap by assessing the direction and extent of the effect of agricultural foreign divestment on agricultural domestic investment in developing countries. The panel data of 50 countries, covering 1995 to 2020 and making up 619 observations, was fitted to fixed and random effects as well as generalised estimation equation estimators. We found agricultural foreign divestment crowded out agricultural domestic investment in developing countries. Economic managers in developing countries must work towards strong macroeconomic indicators, as these have collateral benefits for enhancing agricultural domestic investment.