Foreign Direct Investments in Africa's Farmlands: Threat or Opportunity for Local Populations?

Sylvain Dessy (), Gaston Gohou and Désiré Vencatachellum

Cahiers de recherche from CIRPEE

Abstract: We study the welfare effects of government-backed FDIs in Africa’s farmlands. We build an occupational choice model featuring four mechanisms driving these effects. First, local farming is subject to social arrangements prescribing that farmers share their crop surplus with kin. Second, proceeds from land investment deals are invested to make modern inputs affordable to local farmers. Third, these deals cause some farmers to shift to wage employment. Fourth, they also entrench export-oriented agriculture, at the expense of local markets. We show that three conditions are sufficient for such deals to make local people better off: (i) the state has a high capacity and willingness to negotiate deals that benefit local people; (ii) these deals create enough jobs; (iii) wage employment make displaced farmers better off. Fulfilling these three conditions, however, may conflict with the interests of profit-maximizing foreign investors.

Keywords: FDIs in farmland; local populations; welfare (search for similar items in EconPapers)
JEL-codes: O13 Q15 Q24 Q28 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-afr, nep-agr and nep-dev
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:lvl:lacicr:1203

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