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The Impact of Foreign Capital Inflows on Agriculture Development and Poverty Reduction: Panel Data Analysis for Developing Countries

Furqan Sikandar, Vasilii Erokhin (), Hongshu Wang, Shafiqur Rehman and Anna Ivolga
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Furqan Sikandar: College of Economics and Management, Northeast Forestry University, Harbin 150040, China
Hongshu Wang: College of Economics and Management, Northeast Forestry University, Harbin 150040, China
Shafiqur Rehman: Business School, University of Central Punjab, Lahore 54000, Pakistan
Anna Ivolga: Faculty of Social and Cultural Service and Tourism, Stavropol State Agrarian University, 355017 Stavropol, Russia

Sustainability, 2021, vol. 13, issue 6, 1-22

Abstract: Combating poverty through the development of agricultural production and providing rural people with new employment and income opportunities in agriculture has become one of the major concerns of both policymakers and scholars worldwide. In many developing countries, government policies have failed to achieve the desired poverty alleviation goals due to the lack of financial resources. Despite that, few comprehensive studies have so far unambiguously identified the effects of the exogenous factor of capital inflows on the level of poverty and agriculture development. In this paper, the authors attempt to shed light on the poverty–agriculture–capital trilemma pattern by revealing the impacts of different types of capital inflows on the parameters of poverty reduction and agriculture development. The panel unit root test and pool mean group estimation techniques were employed for observing the short-term and long-term linkages between dependent and explanatory variables across fourteen developing economies of Latin America, Asia, and Eastern Europe. It was revealed that poverty reduction could be positively affected by an increase in the values of agricultural exports, foreign direct investment, foreign development assistance, and remittances received from migrant workers. The level of agriculture could be improved by deeper integration of developing economies to global food supply chains as either suppliers or consumers of food and agricultural products.

Keywords: poverty; agriculture development; pooled mean group; foreign capital inflows (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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