The determinants of large-scale land investments in Africa

Available pieces of evidence have shown that there is a global rush for large-scale land acquisition and the demand for Africa’s land as increased over time. However, due to the continuous land demand for economic activities, the availability of fertile land becomes increasingly difficult. It is on this basis that this study investigates the factors that determine the large-scale land investment in Africa using the selection model with firm heterogeneity. At the extensive margin of investment, the decision to acquire large-scale land is determined by the availability of arable land, economic size of the investors’ countries, institution capacity, governance and security and safety in the destination countries. At the intensive margin, economic size does not stimulate land investment, so also trade, population density, institutions and security of life and property. However, the availability of arable land, good governance and adequate precipitation are investment-enhancing factors.