Impact of Foreign Direct Investment on Agricultural Productivity
MP A R
Munich Personal RePEc Archive
The Impact of Foreign Direct Investment on Agricultural Productivity and Poverty Reduction in Tanzania
Msuya, Elibariki Kyoto University
2007
Online at http://mpra.ub.uni-muenchen.de/3671/ MPRA Paper No. 3671, posted 07. November 2007 / 03:23
The Impact of Foreign Direct Investment on Agricultural Productivity and Poverty Reduction in Tanzania
Elibariki Msuya, mzeeba@hotmail.com Kyoto University, Japan
Abstract
In this paper, the impact of Foreign Direct Investment (FDI) on agricultural productivity and poverty reduction are examined. Factors that hinder FDI flow to agriculture in Tanzania are assessed. Specifically, the role of FDI in improving an agricultural firm’s efficiency in Tanzania and reforms required for more effective investment promotion in agriculture are examined. The study uses literature review to draw its conclusions and policy recommendations. It is observed that FDI has a positive impact on productivity especially to smallholder farmers who are linked in integrated producer schemes. The study recommends rethinking of the smallholder institutional setup for increasing productivity and FDI flow to the agricultural sector. An important implication of the results is that FDI to Tanzania and specifically to agriculture has a much more far- reaching economic and social impact than in other sectors.
1.
Introduction
FDI has been shown to play an important role in promoting economic growth, raising a country’s technological level, and creating new employment in developing countries (Blomström and Kokko, 2003; Klein, Aaron, and Hadjimichael, 2003; Borenzstein, De Gregorio, and Lee. 1998). It has also been shown that FDI works as a means of integrating developing countries into the global market place and increasing the capital available for investment, thus leading to increased economic growth needed to reduce poverty and raise living standards (Rutihinda, 2007; Dollar and Kraay, 2000;
Munich Personal RePEc Archive
The Impact of Foreign Direct Investment on Agricultural Productivity and Poverty Reduction in Tanzania
Msuya, Elibariki Kyoto University
2007
Online at http://mpra.ub.uni-muenchen.de/3671/ MPRA Paper No. 3671, posted 07. November 2007 / 03:23
The Impact of Foreign Direct Investment on Agricultural Productivity and Poverty Reduction in Tanzania
Elibariki Msuya, mzeeba@hotmail.com Kyoto University, Japan
Abstract
In this paper, the impact of Foreign Direct Investment (FDI) on agricultural productivity and poverty reduction are examined. Factors that hinder FDI flow to agriculture in Tanzania are assessed. Specifically, the role of FDI in improving an agricultural firm’s efficiency in Tanzania and reforms required for more effective investment promotion in agriculture are examined. The study uses literature review to draw its conclusions and policy recommendations. It is observed that FDI has a positive impact on productivity especially to smallholder farmers who are linked in integrated producer schemes. The study recommends rethinking of the smallholder institutional setup for increasing productivity and FDI flow to the agricultural sector. An important implication of the results is that FDI to Tanzania and specifically to agriculture has a much more far- reaching economic and social impact than in other sectors.
1.
Introduction
FDI has been shown to play an important role in promoting economic growth, raising a country’s technological level, and creating new employment in developing countries (Blomström and Kokko, 2003; Klein, Aaron, and Hadjimichael, 2003; Borenzstein, De Gregorio, and Lee. 1998). It has also been shown that FDI works as a means of integrating developing countries into the global market place and increasing the capital available for investment, thus leading to increased economic growth needed to reduce poverty and raise living standards (Rutihinda, 2007; Dollar and Kraay, 2000;
References: Among projects approved by Tanzania Investment Centre between September 1990 and June 2004, agricultural and livestock projects accounted for only 5 percent of the total value of investment (URT, 2005). To generate employment of one person in agriculture sector, it requires approximate an investment of TSh.7 million, while in the construction sector would require an investment of about TSh.115 million (URT, 2005). 4 Mtibwa Sugar Estate (MSE) was handed over to Tanzania Sugar Industries (TSI) in August, 1998 (after TSI had bought the company)