Domestic and foreign direct investment in Ghanaian agriculture

Abstract

Purpose – The purpose of this paper is to investigate the effects of foreign direct investment (FDI) into agriculture on domestic investment in agriculture. Design/methodology/approach – Time series data from 1976 to 2007 was fitted to a derived model. Findings – Foreign direct investment into agriculture crowd-in domestic investment into agriculture. Research limitations/implications – A targeted approach that will attract foreign direct investment into agriculture is required as to complement existing efforts at boosting domestic agricultural investment. Originality/value – Numerous papers investigated the relationship between foreign direct investment and domestic investment at the aggregate national and regional levels. However, the evidence for this relationship has been conflicting. That for agriculture is rare. For Ghana, a developing agrarian economy that has promoted foreign direct investment for some decades now, it is imperative to establish the relationship between foreign direct investments and domestic investment. Also, the estimation was based on a theoretically derived model.

Influence of foreign direct investment and exchange rate on fisheries in Nigeria

“…Similarly, Oloyede (2014) using a Granger causality test found a positive relationship between FDI and agricultural sector development in Nigeria with data that spanned from 1981 to 2012. Other research works showed a positive relationship between FDI and agricultural output includes Kareem et al (2013) and Gameli Djokoto et al (2014). They all used different techniques but arrived at similar conclusions.…”

Level of development, foreign direct investment and domestic investment in food manufacturing

“… Kim & Seo (2003) found a significant crowd-in effect of FDI on DI for the whole of Korea. In the long run, whilst Agosin & Machado (2005) ; Morrissey & Udomkerdmongkol (2012) and Mutenyo & Asmah (2010) reported crowding out effect of FDI on DI for Latin America, developing countries and sub-Saharan Africa respectively, Djokoto et al (2014) and Farla et al (2016) found the crowding-in effect of FDI on DI for Ghanaian agriculture and developing countries respectively. Babu (2021) found a crowding-out effect for India based on data from 1990/91 to 2014/15.…”

“…As the sector needs more investments for growth and development ( Hine, 2015 ; Primanthi, 2015 ), many countries have pursued policies to attract foreign direct investment (FDI) into the food manufacturing sectors of their respective economies to reap benefits including investment accumulation, technology transfer and job creation ( de Mello Jr, 1997 ; Farla et al, 2016 ; Kosova, 2010 ). Aside from these benefits, there is evidence that the inflow of FDI compliments domestic investment (DI) ( Farla et al, 2016 ; Mileva, 2008 ) or substitute DI ( Budang & Hakim, 2020 ; Oualy, 2019 ) for whole economy cases as well as the agricultural sector ( Djokoto et al, 2014 ). Agosin & Machado (2005) and Gallova (2011) have reported a neutral effect of FDI on DI.…”

“… Pagoulatos (1983) studied the effect of FDI in US food and tobacco manufacturing on domestic economic performance. Djokoto et al (2014) investigated the effect of FDI on the DI of agriculture in Ghana. In cross-country studies, Agosin & Machado (2005) studied the effect of FDI on DI for whole economies of developing countries, Budang & Hakim (2020) for Asian countries, Gallova (2011) and Mileva (2008) on transition economies, Pilbeam & Oboleviciute (2012) for EU countries, and Wang (2010) for developed and developing countries.…”

“… Babu (2021) found a crowding-out effect for India based on data from 1990/91 to 2014/15. Djokoto et al (2014) attributed the positive effect to technology diffusion and spillover of management know-how by MNEs and vertical inter-firm linkages with domestic firms.…”