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Foreign Direct Investment and Agricultural Growth: Panel Data Evidence on Chinese FDI Inflows in African Countries

Author

Listed:
  • Lawal, Ademuyiwa A.
  • Xijuang, Huang
  • Zololo, Ukasha

Abstract

This study examined the impact of Chinese foreign direct investment (CFDI) on the annual growth rate (AGR) of agricultural value added in Africa and analyzed the correlation between AGR and employment in the agriculture sector (EIA) from 2003 to 2021. The study employed annual panel data from 15 African countries obtained from authoritative databases such as the World Development Indicators. To guarantee the dependability of the results, the research carried out several preparatory tests, such as crosssectional dependency, unit root, and cointegration tests. The tests validated that the variables satisfied the requisite criteria for utilizing panel autoregressive distributed lag (ARDL) estimation techniques, such as mean group (MG), pooled MG (PMG), and dynamic fixed effect (DFE). The Hausman test validated the PMG model as the most appropriate for the estimations among the various techniques. The empirical results obtained using the PMG model provided fascinating insights. Evidence demonstrated that CFDI inflows had a favorable and statistically significant impact on the growth rate of agricultural value added in Africa. These findings suggest that Chinese investments have a positive impact on the agriculture sector in Africa. As the economy expands, it creates a favorable atmosphere for the agriculture sector to flourish. Moreover, the presence of EIA is vital in improving Africa’s agricultural growth rate. Based on these discoveries, policymakers can create a supportive atmosphere for the long-term and comprehensive growth of agriculture in Africa. The study’s findings have significant consequences for academic research, educational discourse, and socioeconomic legislation.

Suggested Citation

  • Lawal, Ademuyiwa A. & Xijuang, Huang & Zololo, Ukasha, . "Foreign Direct Investment and Agricultural Growth: Panel Data Evidence on Chinese FDI Inflows in African Countries," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 22(1).
    • Handle: RePEc:ags:phajad:358991
    DOI: 10.22004/ag.econ.358991
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    References listed on IDEAS

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    1. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2010. "FDI in agricultural land, welfare and unemployment in a developing economy," Research in Economics, Elsevier, vol. 64(4), pages 229-239, December.
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    3. Jerry Hausman, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    4. Berna Dogan, . "Does FDI in agriculture promote food security in developing countries? The role of land governance," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    5. Cotula, Lorenzo, 2009. "Land grab or development opportunity? International farmland deals in Africa," Columbia FDI Perspectives 8, Columbia University, Columbia Center on Sustainable Investment (CCSI).
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