Authors :
OLUWAYEMISI OLADUNNI GBOLADE
Volume/Issue :
Volume 6 - 2021, Issue 10 - October
Google Scholar :
http://bitly.ws/gu88
Scribd :
https://bit.ly/3EpcrNr
Abstract :
The Food and Agricultural Organisation (FAO) of the United Nations categorises investments
in agriculture as domestic private, domestic public, foreign private, and foreign public
investments. The main objective of this study is to estimate the impact of the categories of
investments in agriculture on agricultural output in Africa. The patterns of investments in
agriculture in Africa, and the direction of causality between the investment categories in
agriculture and agricultural output in Africa were also examined. Agricultural output index,
agricultural gross fixed capital formation, general government expenditure on agriculture,
public spending on agricultural research and development (R&D), foreign direct investments,
and development flows to agriculture are prominent variables of the study. The data sources of
these variables include the FAO of the United Nations, the International Food Policy Research
Institute (IFPRI), and the United Nations Conference on Trade and Development (UNCTAD).
The agricultural output model was constructed using balanced panel data on 36 membercountries of the African Union covering the period of 1980 - 2018. Three panel data models
were evaluated for the study, namely, Pooled Ordinary Least Squares (Pooled OLS), FixedEffects (FE), and Random-Effects (RE) models, with the FE model emerging superior. The
results reveal that foreign private investments (FPRI) are the largest source of investments in
agriculture in Africa, followed by domestic private investments (DPRI), domestic public
investments (i.e., domestic public investments in terms of general government expenditure on
agriculture {DPGE} plus domestic public investments in terms of public spending on
agricultural R&D {DPRD}), and foreign public investments (FPUI). Furthermore, with the
exception of DPGE and FPUI, which are positively correlated with agricultural output, but
statistically insignificant, the categories of investments in agriculture have a significant positive
impact on agricultural output in Africa, with the order of significance being DPRI, DPRD, and
FPRI. Finally, there is unidirectional causality between the investment categories in
agriculture and agricultural output in Africa, with causality from investment category to
agricultural output in the cases of DPRI, DPRD, FPRI, and FPUI, but the other way round in
the case of DPGE. Based on these findings, agricultural development initiatives in Africa
should be geared towards increasing domestic private sector participation in agriculture.
Agricultural research and development (R&D) policy framework should be designed to focus
on agricultural science and technology. An environment that is conducive for foreign
investment should be created and sustained across Africa.
Keywords :
domestic private, domestic public, foreign private, and foreign public investments in agriculture; and agricultural output in Africa
The Food and Agricultural Organisation (FAO) of the United Nations categorises investments
in agriculture as domestic private, domestic public, foreign private, and foreign public
investments. The main objective of this study is to estimate the impact of the categories of
investments in agriculture on agricultural output in Africa. The patterns of investments in
agriculture in Africa, and the direction of causality between the investment categories in
agriculture and agricultural output in Africa were also examined. Agricultural output index,
agricultural gross fixed capital formation, general government expenditure on agriculture,
public spending on agricultural research and development (R&D), foreign direct investments,
and development flows to agriculture are prominent variables of the study. The data sources of
these variables include the FAO of the United Nations, the International Food Policy Research
Institute (IFPRI), and the United Nations Conference on Trade and Development (UNCTAD).
The agricultural output model was constructed using balanced panel data on 36 membercountries of the African Union covering the period of 1980 - 2018. Three panel data models
were evaluated for the study, namely, Pooled Ordinary Least Squares (Pooled OLS), FixedEffects (FE), and Random-Effects (RE) models, with the FE model emerging superior. The
results reveal that foreign private investments (FPRI) are the largest source of investments in
agriculture in Africa, followed by domestic private investments (DPRI), domestic public
investments (i.e., domestic public investments in terms of general government expenditure on
agriculture {DPGE} plus domestic public investments in terms of public spending on
agricultural R&D {DPRD}), and foreign public investments (FPUI). Furthermore, with the
exception of DPGE and FPUI, which are positively correlated with agricultural output, but
statistically insignificant, the categories of investments in agriculture have a significant positive
impact on agricultural output in Africa, with the order of significance being DPRI, DPRD, and
FPRI. Finally, there is unidirectional causality between the investment categories in
agriculture and agricultural output in Africa, with causality from investment category to
agricultural output in the cases of DPRI, DPRD, FPRI, and FPUI, but the other way round in
the case of DPGE. Based on these findings, agricultural development initiatives in Africa
should be geared towards increasing domestic private sector participation in agriculture.
Agricultural research and development (R&D) policy framework should be designed to focus
on agricultural science and technology. An environment that is conducive for foreign
investment should be created and sustained across Africa.
Keywords :
domestic private, domestic public, foreign private, and foreign public investments in agriculture; and agricultural output in Africa
