The Role of Foreign Direct Investment in External Agricultural Trade of Chosen Developing Countries To The period 1995-2017


Foreign direct investment (FDI) is defined as the type of investment that occurs when an investor in a foreign country possesses assets or properties in another country for the purpose of carrying out a particular economic activity in industry, agriculture or services. The transfer of technology and technical expertise accompanies this type of investment to the host country. Basing on the importance of this kind of investment, our study adopted a hypothesis that foreign direct investment contributes with variant effects to the external agricultural trade of a number of developing countries for the period (1995-2017). In order to verify this hypothesis, a number of developing countries were chosen including (Jordan, Morocco, Egypt, and Thailand) to be the sample of our study. Time series data were used to estimate the impact of both (Value of foreign direct investment X1, foreign exchange rate X2, value of local agricultural product X3, inflation rate X4, values of the deficit in the general budget of the state X5, and security and political stability of the country X6) as independent variables and their impact on agricultural exports Y1, agricultural imports Y2 and net foreign agricultural trade Y3. For the purposes of estimation and analysis, several standard models are used for different linear regression cases based on the usual least squares method as they give the best unbiased linear estimates that often agree with the concepts of economic theory. In this study, we reached a number of conclusions; the most important of which was the contribution of foreign direct investment to increasing the values of net foreign agricultural trade in the host countries. FDI is considered one of the most important foreign finance sources in these countries. We also concluded that there is a low FDI entering the sample countries due to the long period of capital circulation in their agricultural sector and the inadequate infrastructure. The most important recommendations are to develop the agricultural actuality in the countries of the study sample to become suitable for attracting more foreign direct investment companies. Activate the positive role of macroeconomic variables, that act side by side with the foreign direct investment and is presently lowering its flow due to the impact of the existing non-positive variables brought up by the above-mentioned companies and to face their negative influences