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 theagricultural sector is limited. None of these addressed the effect of agricultural foreigndivestment on agricultural domestic investment. This paper filled this gap by assessing thedirection and extent of the effect of agricultural foreign divestment on agricultural domesticinvestment in developing countries. The panel data of 50 countries, covering 1995 to 2020 andmaking up 619 observations, was fitted to fixed and random effects as well as generalisedestimation equation estimators. We found agricultural foreign divestment crowded outagricultural domestic investment in developing countries. Economic managers in developingcountries must work towards strong macroeconomic indicators, as these have collateralbenefits for enhancing agricultural domestic investment.