IDEAS home Printed from https://ideas.repec.org/a/eee/forpol/v169y2024ics1389934124002077.html

Food and the forest: A spatial analysis on the nexus between foreign direct investment and deforestation

Author

Listed:
  • Bortolotti, Luca
  • Marson, Marta
  • Saccone, Donatella

Abstract

This study examines the effect of foreign direct investment (FDI) on deforestation in non-OECD countries, in consideration of the potential trade-offs between economic objectives and environmental concerns and the pollution haven hypothesis. The study applies a multilevel fixed effects estimator to an original panel dataset of more than 4500 locations that received FDI across 120 countries between 2003 and 2019 and considers the sectors and sub-sectors of investment projects to examine heterogeneous land intensity in agricultural and food activities. Three main conclusions emerge. First, the food sector is primarily responsible for FDI-driven forest loss, while FDI projects in other sectors do not seem to significantly contribute to deforestation. Second, forest loss induced by food FDI is driven by specific sub-sectors; in particular, FDI projects in the food trade and services sub-sector seem to be significant, which is likely attributable to increased demand for local agricultural production. Third, animal industry FDI has the most significant impact on forest loss where the forest land cover is dominant.

Suggested Citation

  • Bortolotti, Luca & Marson, Marta & Saccone, Donatella, 2024. "Food and the forest: A spatial analysis on the nexus between foreign direct investment and deforestation," Forest Policy and Economics, Elsevier, vol. 169(C).
    • Handle: RePEc:eee:forpol:v:169:y:2024:i:c:s1389934124002077
    DOI: 10.1016/j.forpol.2024.103353
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1389934124002077
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.forpol.2024.103353?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Bokpin, Godfred A., 2017. "Foreign direct investment and environmental sustainability in Africa: The role of institutions and governance," Research in International Business and Finance, Elsevier, vol. 39(PA), pages 239-247.
    2. Asiedu, Elizabeth, 2002. "On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?," World Development, Elsevier, vol. 30(1), pages 107-119, January.
    3. Serge Mandiefe Piabuo & Janice Tieguhong Puatwoe & Paule Pamela Tabi Eckebil & Tieminie Robinson Nghogekeh & Divine Foundjem-Tita, 2024. "Foreign direct investment and carbon emissions from land use, land-use change, and forestry (LULUCF): empirical evidence from tropical forest countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(6), pages 15639-15665, June.
    4. Damman, Siri & Eide, Wenche Barth & Kuhnlein, Harriet V., 2008. "Indigenous peoples' nutrition transition in a right to food perspective," Food Policy, Elsevier, vol. 33(2), pages 135-155, April.
    5. Yulin Ning & Michael R. Reed, 1995. "Locational determinants of the US direct foreign investment in food and kindred products," Agribusiness, John Wiley & Sons, Ltd., vol. 11(1), pages 77-85.
    6. Barrett, Christopher B. & Bachke, Maren E. & Bellemare, Marc F. & Michelson, Hope C. & Narayanan, Sudha & Walker, Thomas F., 2012. "Smallholder Participation in Contract Farming: Comparative Evidence from Five Countries," World Development, Elsevier, vol. 40(4), pages 715-730.
    7. Myeong Hwan Kim & Nodir Adilov, 2012. "The lesser of two evils: an empirical investigation of foreign direct investment-pollution tradeoff," Applied Economics, Taylor & Francis Journals, vol. 44(20), pages 2597-2606, July.
    8. Sam Asher & Tobias Lunt & Ryu Matsuura & Paul Novosad, 2021. "Development Research at High Geographic Resolution: An Analysis of Night-Lights, Firms, and Poverty in India Using the SHRUG Open Data Platform," The World Bank Economic Review, World Bank, vol. 35(4), pages 845-871.
    9. Henderson, Vernon & Squires, Tim & Storeygard, Adam & Weil, David, 2018. "The global distribution of economic activity: nature, history, and the role of trade," LSE Research Online Documents on Economics 79709, London School of Economics and Political Science, LSE Library.
    10. Faria, Weslem Rodrigues & Almeida, Alexandre Nunes, 2016. "Relationship between openness to trade and deforestation: Empirical evidence from the Brazilian Amazon," Ecological Economics, Elsevier, vol. 121(C), pages 85-97.
    11. Rudel, Tom & Roper, Jill, 1997. "The paths to rain forest destruction: Crossnational patterns of tropical deforestation, 1975-1990," World Development, Elsevier, vol. 25(1), pages 53-65, January.
    12. Adam Ozimek & Daniel Miles, 2011. "Stata utilities for geocoding and generating travel time and travel distance information," Stata Journal, StataCorp LLC, vol. 11(1), pages 106-119, March.
    13. Popkin, Barry M., 2006. "Technology, transport, globalization and the nutrition transition food policy," Food Policy, Elsevier, vol. 31(6), pages 554-569, December.
    14. Müller-Hansen, Finn & Heitzig, Jobst & Donges, Jonathan & Cardoso, Manoel F. & Dalla-Nora, Eloi L. & Andrade, Pedro R. & Kurths, Jürgen & Thonicke, Kirsten, 2019. "Can intensification of cattle ranching reduce deforestation in the Amazon? Insights from an agent-based social-ecological model," SocArXiv x5q9j, Center for Open Science.
    15. Iamsiraroj, Sasi, 2016. "The foreign direct investment–economic growth nexus," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 116-133.
    16. Harouna Kinda & Noel Thiombiano, 2021. "The effects of extractive industries rent on deforestation in developing countries," Post-Print hal-03344196, HAL.
    17. Root, Franklin R & Ahmed, Ahmed A, 1979. "Empirical Determinants of Manufacturing Direct Foreign Investment in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 27(4), pages 751-767, July.
    18. Cong Minh Huynh & Hong Hiep Hoang, 2019. "Foreign direct investment and air pollution in Asian countries: does institutional quality matter?," Applied Economics Letters, Taylor & Francis Journals, vol. 26(17), pages 1388-1392, October.
    19. repec:osf:socarx:x5q9j_v1 is not listed on IDEAS
    20. Angelsen, Arild & Kaimowitz, David, 1999. "Rethinking the Causes of Deforestation: Lessons from Economic Models," The World Bank Research Observer, World Bank, vol. 14(1), pages 73-98, February.
    21. Huaranca, Laura Liliana & Iribarnegaray, Martín Alejandro & Albesa, Federico & Volante, José Norberto & Brannstrom, Christian & Seghezzo, Lucas, 2019. "Social Perspectives on Deforestation, Land Use Change, and Economic Development in an Expanding Agricultural Frontier in Northern Argentina," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.
    22. Melisa Chanegriha & Chris Stewart & Christopher Tsoukis, 2017. "Identifying the robust economic, geographical and political determinants of FDI: an Extreme Bounds Analysis," Empirical Economics, Springer, vol. 52(2), pages 759-776, March.
    23. De Oliveira Silva, Rafael & Barioni, Luis G. & Moran, Dominic, 2021. "Fire, deforestation, and livestock: When the smoke clears," Land Use Policy, Elsevier, vol. 100(C).
    24. Castellani, Davide & Pieri, Fabio, 2013. "R&D offshoring and the productivity growth of European regions," Research Policy, Elsevier, vol. 42(9), pages 1581-1594.
    25. Davide Castellani & Valentina Meliciani & Loredana Mirra, 2016. "The Determinants of Inward Foreign Direct Investment in Business Services across European Regions," Regional Studies, Taylor & Francis Journals, vol. 50(4), pages 671-691, April.
    26. J. Vernon Henderson & Adam Storeygard & David N. Weil, 2012. "Measuring Economic Growth from Outer Space," American Economic Review, American Economic Association, vol. 102(2), pages 994-1028, April.
    27. Ryan Abman & Clark Lundberg, 2020. "Does Free Trade Increase Deforestation? The Effects of Regional Trade Agreements," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(1), pages 35-72.
    28. Bender, William H., 1994. "An end use analysis of global food requirements," Food Policy, Elsevier, vol. 19(4), pages 381-395, August.
    29. Christian Baehr & Ariel BenYishay & Bradley Parks, 2021. "Linking Local Infrastructure Development and Deforestation: Evidence from Satellite and Administrative Data," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 8(2), pages 375-409.
    30. Müller-Hansen, Finn & Heitzig, Jobst & Donges, Jonathan F. & Cardoso, Manoel F. & Dalla-Nora, Eloi L. & Andrade, Pedro & Kurths, Jürgen & Thonicke, Kirsten, 2019. "Can Intensification of Cattle Ranching Reduce Deforestation in the Amazon? Insights From an Agent-based Social-Ecological Model," Ecological Economics, Elsevier, vol. 159(C), pages 198-211.
    31. Doytch, Nadia & Uctum, Merih, 2016. "Globalization and the environmental impact of sectoral FDI," Economic Systems, Elsevier, vol. 40(4), pages 582-594.
    32. Boris OK Lokonon & Ichaou Mounirou, 2019. "Does foreign direct investment impede forest area in Sub‐Saharan Africa?," Natural Resources Forum, Blackwell Publishing, vol. 43(4), pages 230-240, November.
    33. Wehkamp, Johanna & Koch, Nicolas & Lübbers, Sebastian & Fuss, Sabine, 2018. "Governance and deforestation — a meta-analysis in economics," Ecological Economics, Elsevier, vol. 144(C), pages 214-227.
    34. Ajanaku, B.A. & Collins, A.R., 2021. "Economic growth and deforestation in African countries: Is the environmental Kuznets curve hypothesis applicable?," Forest Policy and Economics, Elsevier, vol. 129(C).
    35. Bellemare, Marc F. & Bloem, Jeffrey R., 2018. "Does contract farming improve welfare? A review," World Development, Elsevier, vol. 112(C), pages 259-271.
    36. Makki, Shiva S. & Somwaru, Agapi & Bolling, H. Christine, 2004. "Determinants of Foreign Direct Investment in the Food-Processing Industry: A Comparative Analysis of Developed and Developing Economies," Journal of Food Distribution Research, Food Distribution Research Society, vol. 35(3), pages 1-8, November.
    37. Jonah Busch & Kalifi Ferretti-Gallon, 2023. "What Drives and Stops Deforestation, Reforestation, and Forest Degradation? An Updated Meta-analysis," Review of Environmental Economics and Policy, University of Chicago Press, vol. 17(2), pages 217-250.
    38. Walker, Robert & Moran, Emilio & Anselin, Luc, 2000. "Deforestation and Cattle Ranching in the Brazilian Amazon: External Capital and Household Processes," World Development, Elsevier, vol. 28(4), pages 683-699, April.
    39. Miyamoto, Motoe, 2020. "Poverty reduction saves forests sustainably: Lessons for deforestation policies," World Development, Elsevier, vol. 127(C).
    40. Tetsuya Tsurumi & Shunsuke Managi, 2014. "The effect of trade openness on deforestation: empirical analysis for 142 countries," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 16(4), pages 305-324, October.
    41. Gibson, John & Olivia, Susan & Boe-Gibson, Geua & Li, Chao, 2021. "Which night lights data should we use in economics, and where?," Journal of Development Economics, Elsevier, vol. 149(C).
    42. Bailey, Nicholas, 2018. "Exploring the relationship between institutional factors and FDI attractiveness: A meta-analytic review," International Business Review, Elsevier, vol. 27(1), pages 139-148.
    43. Jonah Busch & Kalifi Ferretti-Gallon, 2017. "What Drives Deforestation and What Stops It? A Meta-Analysis," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(1), pages 3-23.
    44. Sara Amoroso & Bettina Müller, 2018. "The short-run effects of knowledge intensive greenfield FDI on new domestic entry," The Journal of Technology Transfer, Springer, vol. 43(3), pages 815-836, June.
    45. J Vernon Henderson & Tim Squires & Adam Storeygard & David Weil, 2018. "The Global Distribution of Economic Activity: Nature, History, and the Role of Trade1," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(1), pages 357-406.
    46. Peter Walkenhorst;, 2001. "Determinants of foreign direct investment in the food industry: The case of Poland," Agribusiness, John Wiley & Sons, Ltd., vol. 17(3), pages 383-395.
    47. 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.
    48. Myeong Hwan Kim & Nodir Adilov, 2012. "The lesser of two evils: an empirical investigation of foreign direct investment-pollution tradeoff," Applied Economics, Taylor & Francis Journals, vol. 44(20), pages 2597-2606, July.
    49. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    50. Leblois, Antoine & Damette, Olivier & Wolfersberger, Julien, 2017. "What has Driven Deforestation in Developing Countries Since the 2000s? Evidence from New Remote-Sensing Data," World Development, Elsevier, vol. 92(C), pages 82-102.
    51. Kinda, Harouna & Thiombiano, Noel, 2021. "The effects of extractive industries rent on deforestation in developing countries," Resources Policy, Elsevier, vol. 73(C).
    52. Fotini Economou & Christis Hassapis & Nikolaos Philippas & Mike Tsionas, 2017. "Foreign Direct Investment Determinants in OECD and Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 527-542, August.
    53. Yuquing Xing & Charles Kolstad, 2002. "Do Lax Environmental Regulations Attract Foreign Investment?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(1), pages 1-22, January.
    54. Angelsen, Arild, 1999. "Agricultural expansion and deforestation: modelling the impact of population, market forces and property rights," Journal of Development Economics, Elsevier, vol. 58(1), pages 185-218, February.
    55. Caravaggio, Nicola, 2020. "A global empirical re-assessment of the Environmental Kuznets curve for deforestation," Forest Policy and Economics, Elsevier, vol. 119(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tillaguango, Brayan & Alvarado, Rafael & Ahmad, Munir & Rehman, Abdul & Işık, Cem & Chamba, José, 2025. "Impact of agricultural employment, gross domestic product, informal economy, institutional quality on forest cover in Ecuador," Forest Policy and Economics, Elsevier, vol. 174(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Berman, Nicolas & Couttenier, Mathieu & Leblois, Antoine & Soubeyran, Raphael, 2023. "Crop prices and deforestation in the tropics," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    2. Mouhamed Zerbo, 2025. "Does log export ban policy a good strategy to fight deforestation? Lessons from developing countries," Post-Print hal-04976257, HAL.
    3. Ayad, Hicham & Hassoun, Salaheddine Sari & Abdelkader, Salim Bourchid & Sallam, Osama Azmi Abddel-Jalil, 2024. "Assessing deforestation in the Brazilian forests: An econometric inquiry into the load capacity curve for deforestation," Forest Policy and Economics, Elsevier, vol. 159(C).
    4. Sohag, Kazi & Gainetdinova, Anna & Mariev, Oleg, 2023. "Economic growth, institutional quality and deforestation: Evidence from Russia," Forest Policy and Economics, Elsevier, vol. 150(C).
    5. Ajanaku, B.A. & Collins, A.R., 2021. "Economic growth and deforestation in African countries: Is the environmental Kuznets curve hypothesis applicable?," Forest Policy and Economics, Elsevier, vol. 129(C).
    6. Jonas Ngouhouo-Poufoun & Sabine Chaupain-Guillot & Youba Ndiaye & Denis Jean Sonwa & Kevin Yana Njabo & Philippe Delacote, 2024. "Cocoa, livelihoods, and deforestation within the Tridom landscape in the Congo Basin: A spatial analysis," PLOS ONE, Public Library of Science, vol. 19(6), pages 1-29, June.
    7. Shinde, Nilesh N. & Do Valle, Stella Z. Schons & Maia, Alexandre Gori & Amacher, Gregory S., 2022. "Can an environmental policy contribute to the reduction of land conflict? Evidence from the Rural Environmental Registry (CAR) in the Brazilian Amazon," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322584, Agricultural and Applied Economics Association.
    8. Giorgio Chiovelli & Stelios Michalopoulos & Elias Papaioannou & Tanner Regan, 2025. "Illuminating the Global South," Documentos de Trabajo/Working Papers 2507, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    9. Tandetzki, Julia & Morland, Christian & Schier, Franziska, 2025. "Beyond the forest transition hypothesis: Uncovering the drivers influencing natural, planted and plantation forest area development using regression-based machine learning approaches," Land Use Policy, Elsevier, vol. 158(C).
    10. Dickinson, Jeffrey, 2020. "Planes, Trains, and Automobiles: What Drives Human-Made Light?," MPRA Paper 103504, University Library of Munich, Germany.
    11. Weslem Rodrigues Faria & Felipe Morelli Silva & Alexandre Nunes Almeida & Admir Antonio Betarelli Junior, 2025. "The relationship between rural credit policy and deforestation: evidence from Brazil," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 27(2), pages 231-263, April.
    12. Barros, Pedro Henrique Batista de & Chimeli, Ariaster Baumgratz, 2025. "Can economic development and forest conservation coexist? Revisiting growth and deforestation in the Brazilian Amazon," World Development, Elsevier, vol. 195(C).
    13. Combes, Jean-Louis & Delacote, Philippe & Combes Motel, Pascale & Yogo, Thierry Urbain, 2018. "Public spending, credit and natural capital: Does access to capital foster deforestation?," Economic Modelling, Elsevier, vol. 73(C), pages 306-316.
    14. Caravaggio, Nicola, 2020. "A global empirical re-assessment of the Environmental Kuznets curve for deforestation," Forest Policy and Economics, Elsevier, vol. 119(C).
    15. Ricardo Dahis & Christiane Szerman, 2023. "Decentralizing Development: Evidence from Government Splits," Monash Economics Working Papers 2023-18, Monash University, Department of Economics.
    16. Brandão, Frederico & Befani, Barbara & Soares-Filho, Jaílson & Rajão, Raoni & Garcia, Edenise, 2023. "How to halt deforestation in the Amazon? A Bayesian process-tracing approach," Land Use Policy, Elsevier, vol. 133(C).
    17. Demena, Binyam Afewerk & Afesorgbor, Sylvanus Kwaku, 2020. "The effect of FDI on environmental emissions: Evidence from a meta-analysis," Energy Policy, Elsevier, vol. 138(C).
    18. Bluhm, Richard & Krause, Melanie, 2022. "Top lights: Bright cities and their contribution to economic development," Journal of Development Economics, Elsevier, vol. 157(C).
    19. Linsenmeier, Manuel, 2023. "Temperature variability and long-run economic development," Journal of Environmental Economics and Management, Elsevier, vol. 121(C).
    20. Kazungu, Moses & Ferrer Velasco, Rubén & Zhunusova, Eliza & Lippe, Melvin & Kabwe, Gillian & Gumbo, Davison J. & Günter, Sven, 2021. "Effects of household-level attributes and agricultural land-use on deforestation patterns along a forest transition gradient in the Miombo landscapes, Zambia," Ecological Economics, Elsevier, vol. 186(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:forpol:v:169:y:2024:i:c:s1389934124002077. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/forpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.