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Does Agricultural Foreign Direct Investment Boost the Human Development in Sub‐Saharan Africa?

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  • Edwin Mumah
  • Yangfen Chen
  • Yu Hong

Abstract

The welfare of sub‐Saharan Africa (SSA) is pivotal for achieving the UN Sustainable Development Goals (SDGs), with the agricultural sector playing a vital role. Many SSA nations increasingly rely on agricultural foreign direct investment (AFDI) to enhance agricultural development and welfare. However, the impact of AFDI on welfare remains controversial and poorly understood. This study employs panel data and moments quantile regression to examine AFDI's effect across 45 SSA countries from 1990 to 2022. Results indicate a significant positive effect on the Human Development Index (HDI) as the welfare indicator, with a one‐unit rise in AFDI linked to a 0.002%−0.008% increase in HDI. When the HDI is decomposed into income, education, and life expectancy, a one‐unit increase in AFDI correlates with increased income levels ($0.001) and life expectancy (0.002 years). Further analysis identifies a threshold of $5.77 million of AFDI beyond which its positive impact on HDI declines. Findings suggest that sustained and consistent AFDI enhances sustainable development and overall welfare in the SSA.

Suggested Citation

  • Edwin Mumah & Yangfen Chen & Yu Hong, 2025. "Does Agricultural Foreign Direct Investment Boost the Human Development in Sub‐Saharan Africa?," African Development Review, African Development Bank, vol. 37(3), September.
    • Handle: RePEc:bla:afrdev:v:37:y:2025:i:3:n:e70024
    DOI: 10.1111/1467-8268.70024
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