Skip to main content
Log in

Who Invests How Much in Agriculture in Low- and Middle-Income Countries? An Empirical Review

  • Original Article
  • Published:
The European Journal of Development Research Aims and scope Submit manuscript

Abstract

This article provides estimates of the relative size of on-farm investment in agriculture; foreign direct investment (FDI) in agriculture; government investments in agriculture; and official development assistance to agriculture. It finds that in a set of 76 low- and middle-income countries farmers are by far the largest investors in primary agriculture. On-farm investments are more than three times as large as all other sources of investment combined, with annual investment in on-farm agricultural capital stock exceeding government investment by more than 4 to 1, and other resource flows by a much larger margin. In spite of significant attention to the role of FDI, the article shows that the levels of FDI in primary agriculture are small, and that their increase has been overstated. The article concludes by recommending some areas for future research and what is needed in terms of data, as well as considering the policy implications of the findings.

Abstract

Cet article fournit des estimations sur les proportions des différentes sources d'investissement en agriculture: les investissements par les producteurs; les investissements directs étrangers en agriculture; et l'assistance officielle pour le développement destinée à l'agriculture. Parmi 76 pays à faible ou moyen revenu, les fermiers sont les principaux investisseurs en agriculture. Les investissements par les producteurs sont trois fois plus importants que tous les autres investissements mis ensemble; les investissements annuels en capital d'exploitation par les producteurs eux-mêmes sont quatre fois plus importants que ceux faits par les gouvernements, et bien plus grands que ceux provenant d'autres sources. Malgré l'attention porteé aux investissements directs étrangers, on trouve que les niveaux des investissements étrangers directs en agriculture sont modestes et que leur croissance a été exagérée. Cette étude se conclut en suggérant des futurs domaines de recherche, en notant ce qu'il faut en termes de données, et avec des considérations concernant les implications pour les politiques.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Figure 1
Figure 2
Figure 3

Similar content being viewed by others

References

  • Akroyd, S. and Smith, L. (2007) Review of Public Spending to Agriculture: A Joint DFID/World Bank Study. Oxford: Oxford Policy Management.

    Google Scholar 

  • Anson, R. and Mogues, T. (2015) A systematic review of data and analytical initiatives on agricultural public expenditures in developing countries. IFPRI Discussion Paper (forthcoming).

  • Anson, R. and Zegarra, E. (2008) Honduras: Public expenditure assessment and strategy for an enhanced agricultural and forestry sector. Washington DC: World Bank (mimeo).

  • Beintema, N., Stads, G.-J., Fuglie, K. and Heisey, P. (2012) ASTI Global Assessment of Agricultural R&D Spending: Developing Countries Accelerate Investment. Washington DC: ASTI GFAR IFPRI.

    Google Scholar 

  • Butzer, R., Mundlak, Y. and Larson, D.F. (2011) Measures of Fixed Capital in Agriculture Washington DC: World Bank. World Bank Policy Research Working Paper 5472.

  • Cammack, T., Fowler, M. and Phomdouangsy, C.D. (2008) Lao PDR Public Expenditure Study: Public Expenditures for Pro-poor Agricultural Growth. Washington DC: World Bank.

    Google Scholar 

  • Coppard, D. (2010) Agricultural Development Assistance: A Summary Review of Trends and the Challenges of Monitoring Progress. A Development Initiatives Report. Washington DC: One.

  • Crego, A., Larson, D., Butzer, R. and Mundlak, Y. (1998) A New Database on Investment and Capital for Agriculture and Manufacturing. Washington DC: World Bank. World Bank Policy Research Working Paper no. WPS 2013.

  • Dillon, A., Sharma, M. and Zhang, X. (2008) Nepal agriculture public expenditure review. London: Department for International Development (mimeo).

  • Fan, S. (2008) Public Expenditures, Growth and Poverty. Lessons from Developing Countries. Washington DC: The Johns Hopkins University Press.

    Google Scholar 

  • FAO (1981) Agriculture toward 2000. Rome: FAO.

  • FAO (2003) Anti Hunger Programme: A Twin-track Approach to Hunger Reduction: Priorities for National and International Action. Rome: FAO.

  • FAO (2012) The State of Food and Agriculture 2012: Investing in Agriculture for a Better Future. Rome: FAO.

  • FAO (2014) FAOSTAT. Investment domain. Capital stock in agriculture. Available at: http://faostat.fao.org/site/660/default.aspx#ancor.

  • FAO (2015) FAOSTAT. Release calendar. Available at: http://faostat3.fao.org/home/E.

  • Hearn, B., Koc, V., Piesse, J. and Thirtle, C. (2010) A preliminary analysis of European assistance to agriculture in Sub-Saharan Africa. Available at http://www3.imperial.ac.uk/africanagriculturaldevelopment/resources/europeanactivity/donorfinancial/aiddataanalysis.

  • Herdt, R. (2010) Development aid and agriculture. In: P. Pingali and R. Evenson (eds.) Handbook of Agricultural Economics. Vol. 4. Amsterdam: Elsevier, pp. 3253–3304.

    Chapter  Google Scholar 

  • IFPRI (2012) Agricultural Science and Technology Indicators Database. Washington DC: IFPRI (available at http://www.asti.cgiar.org/data).

  • IFPRI (2013a) 2012 Global Food Policy Report. Washington DC: IFPRI.

  • IFPRI (2013b) Statistics on Public Expenditure for Economic Development (SPEED) database (available at http://www.ifpri.org/book-39/ourwork/programs/priorities-public-investment/speed-database).

  • IMF (2001) Government Finance Statistics Manual. Washington DC: IMF.

  • Jerven, M. (2013) Poor Numbers: How We Are Misled by African Development Statistics and What To Do About It. Ithaca, NY: Cornell University Press.

    Google Scholar 

  • Kolavalli, S. et al. (2010) Institutional and Public Expenditure Review of Ghana’s Ministry of Food and Agriculture. Washington DC: IFPRI. IFPRI Discussion Paper 1020.

  • Larson, D.F., Butzer, R., Mundlak, Y. and Crego, A. (2000) A cross-country database for sector investment and capital. The World Bank Economic Review 14 (2): 371–391.

    Article  Google Scholar 

  • Lowder, S.K., Carisma, B. and Skoet, J. (2012) Who invests in agriculture and how much? An empirical review of the relative size of various investments in agriculture in low- and middle-income countries. Rome, Italy: the Food and Agriculture Organization of the United Nations. ESA Working paper No. 12-09.

  • Malaiyandi, S. (2010) A Quick Reference and Statistical Appendix for SPEED Statistics on Public Expenditure for Economic Development. Washington DC: IFPRI.

    Google Scholar 

  • Mogues, T. and Caceres, L. (forthcoming) Reconstructing Public Expenditure Data: Use of Classification Systems to Better Measure Public Spending in Agriculture – A Mozambique Case Study. Washington DC: IFPRI. IFPRI Discussion Paper, in press.

  • OECD (2012) Credit Reporting System Aid Activities Database. Paris: OECD. Available at: http://stats.oecd.org/qwids/.

  • Pardey, P.G., Roseboom, J. and Beintema, N. (1997) Investments in African agricultural research. World Development 25 (3): 409–423.

    Article  Google Scholar 

  • Schmidhuber, J.B., Bruinsma, J. and Boedeker, G. (2011) Capital requirements for agriculture in developing countries to 2050. In: P. Conforti (ed.) Looking Ahead in World Food and Agriculture. Rome: FAO.

    Google Scholar 

  • UNCTAD (2009) World Investment Report 2009: Transnational Corporations, Agricultural Production and Development. Geneva: UNCTAD.

  • UNCTAD (2011) Foreign Direct Investment Sectoral Dataset. Unpublished.

  • Von Cramon-Taubadel, S., Anríquez, G., De Haen, H. and Nivyevskyi, O. (2011) Investment in developing countries’ food and agriculture: Assessing agricultural capital stocks and their impact on productivity. In: P. Conforti (ed.) Looking Ahead in World Food and Agriculture: Perspectives to 2050. Rome: FAO.

    Google Scholar 

  • World Bank (2007a) World Development Report 2008: Agriculture for Development. Washington DC: World Bank.

  • World Bank (2007b) Philippines Agriculture Public Expenditure Review. Washington DC: World Bank.

  • World Bank (2007c) Uganda Agriculture Public Expenditure Review. Washington DC: World Bank.

  • World Bank (2008) Nigeria Agriculture Public Expenditure Review. Washington DC: World Bank.

  • World Bank (2011a) Mozambique Analysis of Public Expenditure in Agriculture Volume I: Core Analysis. Washington DC: World Bank.

  • World Bank (2011b) United Republic of Tanzania Public Expenditure Review. Washington DC: World Bank.

Download references

Acknowledgements

This article is based in part on Lowder, S.K., Carisma, B. and Skoet, J. (2012) Who invests in agriculture and how much? An empirical review of the relative size of various investments in agriculture in low- and middle-income countries. Rome, Italy: the Food and Agriculture Organization of the United Nations. ESA Working paper No. 12-09. The material in that paper was prepared as background research in support of FAO's The State of Food and Agriculture 2012: Investing in Agriculture for a Better Future. The report is available at http://www.fao.org/publications/sofa/en. The views expressed in this publication are those of the author(s) and do not necessarily reflect the views or policies of FAO. The authors are most grateful for the provision of datasets by the Food and Agriculture Organization of the United Nations (FAO), the International Food Policy Research Institute (IFPRI), the Organization for Economic Cooperation and Development (OECD) and the United Nations Conference on Trade and Development (UNCTAD). Helpful feedback was received from numerous colleagues both within and outside of FAO. In particular, the authors wish to thank Nienke Beintema, Sangeetha Malaiyandi, Tewodaj Mogues, Michael Rahija, Gert-Jan Stads, and Bingxin Yu (IFPRI), Yasmin Ahmad (OECD), Masataka Fujita (UNCTAD), Gustavo Anríquez, Dominic Ballayan, André Croppenstedt, Carola Fabi, Ilio Fornasero, Amanda Gordon, Massimo Iafrate, Suffyan Koroma, Pascal Liu, Ira Matuschke, Robert Mayo, Masahiro Miyazako, Terri Raney, Eugenia Serova, Saifullah Syed, and Keith Wiebe (FAO).

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Sarah K Lowder.

Appendices

Appendix A

Table A1

Table A1 Key international datasets on financial flows to agriculture used in this article

Appendix B

Table B1

Table B1 Average annual investment in agriculture in low- and middle-income countries, by source and country, most recent year

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Lowder, S., Carisma, B. & Skoet, J. Who Invests How Much in Agriculture in Low- and Middle-Income Countries? An Empirical Review. Eur J Dev Res 27, 371–390 (2015). https://doi.org/10.1057/ejdr.2015.39

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/ejdr.2015.39

Keywords

Navigation