Impact of foreign direct investment on agricultural production and exports of SADC countries
This study investigates the impact of Foreign Direct Investment (FDI) on agricultural production and exports in selected Southern African Development Community (SADC) countries over the period 2001–2021, employing a mixed-effects model. The empirical evidence reveals that FDI serves as a dual cataly...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2025-01-01
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| Series: | Social Sciences and Humanities Open |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S259029112500227X |
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| Summary: | This study investigates the impact of Foreign Direct Investment (FDI) on agricultural production and exports in selected Southern African Development Community (SADC) countries over the period 2001–2021, employing a mixed-effects model. The empirical evidence reveals that FDI serves as a dual catalyst, directly enhancing domestic agricultural production while simultaneously strengthening export capacity in the sector, underscoring its pivotal role in driving agricultural sector growth in SADC countries. While FDI impacts both agricultural production and exports, its effect on production is more pronounced when human capital is considered, suggesting the importance of host country's absorptive capacity in maximising FDI benefits. The positive and significant impact of FDI on agricultural exports suggests that FDI in African agricultural sectors is not only export-oriented but also instrumental in enhancing market access and competitiveness of African agricultural products in the global market. However, the interaction between FDI and human capital exhibits diminishing returns, reflecting deficiencies in the skills and technological proficiency of the region's labour force. The study finds limited evidence of mediating effects of infrastructure, and trade openness in the FDI-agriculture nexus. Instead, trade openness exerts a direct positive influence on agricultural exports, while human capital directly enhances agricultural production. To fully leverage the benefits of FDI inflows into the agricultural sectors of SADC countries, host countries should prioritize investments in human capital development and implement targeted policies to attract export-oriented FDI. |
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| ISSN: | 2590-2911 |