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Tropentag, September 14 - 16, 2022, Prague

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The impact of foreign direct investment on food security in developing countries - evidence from meta-analysis

Tshering Samdrup1, James J Fogarty2, Ram Pandit3

1The University of Western Australia, Department of Agriculture and Resource Economics, School of Agriculture and Environment, Australia
2The University of Western Australia, Department of Agriculture and Resource Economics, School of Agriculture and Environment
3The University of Western Australia, Department of Agriculture and Resource Economics, School of Agriculture and Environment


Abstract


Globally, more than 690 million people were undernourished, hungry in 2020. Achieving food security is a major concern for many developing countries where disproportionately more food insecure people live. These countries also suffer from the lack of internal capacity to invest significantly for national development and improve food security conditions. Foreign Direct Investment (FDI) is an important macroeconomic aggregate that finances the shortfalls in domestic resources for both industrialised and developing countries. In recent years, FDI flow has grown rapidly. Although a positive relationship between FDI and growth is generally agreed, the relationship between FDI and food security is less clear. And alarmingly, small but growing empirical evidence between FDI and food security shows diverging impact of FDIs on food security. It is extremely important to understand the ‘true’ effect of FDI on food security so that either individual countries could attract food security enhancing FDI and/or take mitigatory measures to minimise the impact of FDI on food security.

This paper attempts to reconcile the cause of divergence in the literature using the minimum quality standards framework for conducting meta-analysis suggested by Meta-Analysis of Economics Research Reporting Guidelines (MAER-net. The sample includes 16 primary studies providing 127 estimates of the impact of FDI on food security in developing countries. The synthesis results show an absence of publication selection bias indicating that the diverging conclusions drawn by different empirical studies are not caused, at least from the analysis of primary studies gathered for this study, by data-dredging or p-hacking process.

The overall impact of FDI on food security was found to be not significantly different from zero. The inconclusive empirical evidence in the primary studies is found to be caused by the existence of theoretical ambiguity in the treatment of FDI variables (stock and flows) and data types (panel and time series data) in the literature. With an ongoing global crisis in which increased investment is required to recuperate the global economy as well as to remain on track to achieve the global 2030 agenda, this study recommends using a cautious approach for projecting the impact of FDI on food security.


Keywords: Developing countries, food security, foreign direct investment, meta-analysis


Contact Address: Tshering Samdrup, The University of Western Australia, Department of Agriculture and Resource Economics, School of Agriculture and Environment, 35 stirling highway crawley, 6009 Perth, Australia, e-mail: tshering.samdrup@research.uwa.edu.au


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