Trends and Impacts of Foreign Investment in Developing Country Agriculture: Evidence from case studies

Large-scale international investments in developing country agriculture, especially acquisitions of agricultural land, continue to raise international concern. Certainly, complex and controversial issues – economic, political, institutional, legal and ethical – are raised in relation to food security, poverty reduction, rural development, technology and access to land and water resources. Yet at the same time, some developing countries are making strenuous efforts to attract foreign investment into their agricultural sectors. They see an important role for such investments in filling the gap left by dwindling official development assistance and the limitations of their own domestic budgetary resources, creating employment and incomes and promoting technology transfer. More investment is certainly needed – more than US$80 billion per year according to FAO analysis. But can foreign direct investment be compatible with the needs of local stakeholders as well as those of the international investor? And can these investments yield more general development benefits? Analyzing the impacts of foreign direct investment in developing country agriculture and even understanding its extent and nature has been hampered by the weakness of the available information and the lack of comprehensive statistical data. Much discussion of the phenomenon has been based on media stories but these are potentially misleading unless very carefully triangulated. This lack of reliable detailed information means serious analysis has tended to rely on case studies. This book collects together case studies undertaken by FAO in nine different countries. These add to the increasing volume of evidence from similar case studies undertaken by other international organizations. It is important that any international investment should bring development benefits to the receiving country in terms of technology transfer, employment creation, upstream and downstream linkages and so on if these investments are to be “win-win” rather than “neo-colonialism”. These beneficial flows are not automatic: care must be taken in the formulation of investment contracts and selection of business model. Appropriate legislative and policy frameworks need to be in place. The case studies in this book describe the extent, nature and impacts of international investments and examine the effectiveness of policy and legal frameworks. Obviously, generalizations are difficult both on the impacts of foreign investments and on the best regulatory approaches but the studies provide a wealth of insights which should be valuable to host country governments and investors alike. Their findings shed light on a number of issues including the extent to which forms of investment other than land acquisition – such as contract farming, out-grower schemes and other joint ventures - are more likely to yield development benefits to host countries. They highlight the importance of stronger governance in the host country and provide some indications of the priority areas of focus for international efforts to formulate guiding principles for responsible agricultural investments.

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