Agricultural development in the presence of foreign divestment

Abstract

Following the implications of the loss of employment, revenue, foreign exchange, and the negative impact onoverall agricultural development resulting from foreign divestment, estimates of the extent of foreign divestmenton agricultural development and policy options for ameliorating this effect were obtained. A cross-sectional dataof 159 observations was fitted to a derived model and estimated by OLS. One US$ increase in foreign divestmentreduces agricultural development by US$ 0.04. Policy mixes involving the combination of domestic investment,aid, and trade in response to foreign divestment in agriculture have been proposed. The best policy mix is thecombination of domestic investment, aid, and trade to respond to foreign divestment in agriculture. Aid toagriculture independently was ineffective in promoting agricultural development, however, other variablesproduced a synergistic effect. Despite efforts to attract foreign direct investment in agriculture, foreign divest ment does occur with the associated disbenefits to the sector which is detrimental to agricultural development. Itis important to identify the policy options to address this in the study.