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Foreign Direct Investments in Africa's Farmlands: Threat or Opportunity for Local Populations?

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Author Info

  • Sylvain Dessy
  • Gaston Gohou
  • Désiré Vencatachellum

Abstract

We study the welfare effects of government-backed FDIs in Africa’s farmlands. We build an occupational choice model featuring four mechanisms driving these effects. First, local farming is subject to social arrangements prescribing that farmers share their crop surplus with kin. Second, proceeds from land investment deals are invested to make modern inputs affordable to local farmers. Third, these deals cause some farmers to shift to wage employment. Fourth, they also entrench export-oriented agriculture, at the expense of local markets. We show that three conditions are sufficient for such deals to make local people better off: (i) the state has a high capacity and willingness to negotiate deals that benefit local people; (ii) these deals create enough jobs; (iii) wage employment make displaced farmers better off. Fulfilling these three conditions, however, may conflict with the interests of profit-maximizing foreign investors.

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Bibliographic Info

Paper provided by CIRPEE in its series Cahiers de recherche with number 1203.

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Date of creation: 2012
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Handle: RePEc:lvl:lacicr:1203

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Keywords: FDIs in farmland; local populations; welfare;

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  1. Harounan Kaziango, 2004. "Motives for Household Private Transfers in Burkina Faso," Working Papers 895, Economic Growth Center, Yale University.
  2. Platteau, Jean-Philippe, 2006. "Solidarity Norms and Institutions in Village Societies: Static and Dynamic Considerations," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
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