Abstract
Purpose: The agriculture sector in Africa is a major employer, but production levels have fallen short of demand. To match future demand, public investment in research and development (R&D) is required. The purpose of this paper is to investigate how foreign direct investments (FDIs) moderate the effects of public R&D on Africa’s agricultural production.
Design/methodology/approach: This study estimates an unbalanced panel fixed effect model that consists of 28 African countries covering the period 1980–2014.
Findings: Public R&D increases production in the agriculture sector, however, the effects reverse after ten years. Though FDIs have direct positive effects on production, indirectly, it reduces the productivity potential of public R&D due to the possible dependency syndrome associated with FDIs. Traditional inputs like land, capital, and labour and good political institutions positively drive production, but adverse changes in the weather reduce production.
Practical implications: There should be a frequent update of R&D and improvement in maintenance culture. FDIs should be seen as complementary efforts, and not as substitute efforts to domestic investment efforts in R&D.
Originality/value: Insufficient domestic investment has increased the dependence on FDIs. In this regard, FDIs effect on production could be tricky since it increases the volatility in agricultural R&D. This paper contributes to the literature by examining how FDIs moderate the effects of public R&D on output.
Design/methodology/approach: This study estimates an unbalanced panel fixed effect model that consists of 28 African countries covering the period 1980–2014.
Findings: Public R&D increases production in the agriculture sector, however, the effects reverse after ten years. Though FDIs have direct positive effects on production, indirectly, it reduces the productivity potential of public R&D due to the possible dependency syndrome associated with FDIs. Traditional inputs like land, capital, and labour and good political institutions positively drive production, but adverse changes in the weather reduce production.
Practical implications: There should be a frequent update of R&D and improvement in maintenance culture. FDIs should be seen as complementary efforts, and not as substitute efforts to domestic investment efforts in R&D.
Originality/value: Insufficient domestic investment has increased the dependence on FDIs. In this regard, FDIs effect on production could be tricky since it increases the volatility in agricultural R&D. This paper contributes to the literature by examining how FDIs moderate the effects of public R&D on output.
| Original language | English |
|---|---|
| Pages (from-to) | 290-304 |
| Journal | African Journal of Economic and Management Studies |
| Volume | 9 |
| Issue number | 3 |
| Online published | 10 Jul 2018 |
| DOIs | |
| Publication status | Published - 14 Aug 2018 |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 10 Reduced Inequalities
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SDG 17 Partnerships for the Goals
Research Keywords
- Africa
- Agricultural production
- FDIs
- Research and development
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