The Investment development path theory: Evidence from developing countries' agricultural sector

Background

We examined the investment development path (IDP) through the perspective of developing countries' agricultural sector. Our analytical approach indirectly accounts for interactions among countries regarding cross-border resource transfers. Aside from providing knowledge on testing the IDP by inferential statistics, the information would be relevant for policymaking. Identifying the stage(s) in the IDP not only highlights the global appeal of agriculture but also guides firms seeking to expand beyond borders. This information is essential for developing an effective economic strategy.

Methods

We employed data from 1991 to 2021 for 55 countries from the Food and Agriculture Organization Corporate Statistical Database (FAOSTAT) and applied a fixed effects estimator corrected for serial correlation and non-constant variances.

Results and conclusions

We found that agriculture in developing countries is currently in stages I and II of the IDP. Broadly, agricultural production requires policies that would increase outward foreign direct investment and inward foreign direct investment. Domestic agricultural businesses in developing countries must develop capacity by learning from foreign multinationals. This would enable agricultural businesses to invest abroad. Such a move would lead to an increase in outward FDI. As this would have resulted from increased GDP per capita, it will lead to movement from the existing stage to higher ones.

Impact of Two-Way FDI on China's Environmental Quality: The Perspective of Environmentally Cleaner Production and End Treatment

While the rapid development of two-way foreign direct investment (FDI) has boosted China's economic growth, its impact on environmental quality is uncertain. Based on provincial panel data from China covering the period from 2002 to 2020, this paper proposes an environmental quality assessment index system for China from two aspects: environmentally cleaner production and environmental end treatment. The comprehensive environmental quality index (EQI), environmentally cleaner production index (EPI), and environmental end treatment index (ETI) were all measured, with the geographic information system tool and Dagum Gini coefficient used to analyse the indicators' differences using a system-generalised method-of-moments (SYS-GMM) estimation to study the impact of two-way FDI on environmental quality in various regions across China. The results demonstrate that during the sample period, inward FDI positively impacted environmental quality and cleaner production but had a negative impact on environmental end treatment. Outward FDI significantly promoted EQI, EPI, and ETI, and the interaction between inward FDI and outward FDI positively impacted environmental quality and environmentally cleaner production, while it negatively impacted environmental end treatment. This indicates that under two-way FDI, China's relationship with environmental quality has gradually evolved from 'pollution first and then treatment' to 'green development of cleaner production'.

How Do Environmental Regulations and Outward Foreign Direct Investment Impact the Green Total Factor Productivity in China? A Mediating Effect Test Based on Provincial Panel Data

This paper investigates the impact of two types of environmental regulations (ERs), command-and-control environmental regulation (CACER) and market-incentive environmental regulation (MIER), on green total factor productivity (GTFP) through outward foreign direct investment (OFDI) in 30 provinces in China for the period of 2006-2019. The Global Malmquist-Luenberger (GML) Index based on non-radial directional distance function (NDDF) considering undesired outputs is used to measure GTFP growth at the provincial level. To explore the mediating effect of OFDI, the two-step econometric model and the non-linear mediating effect model are employed. The empirical results show that CACER has an inverted U-shaped impact on OFDI and a U-shaped impact on GTFP, while MIER has a linearly positive effect on OFDI and GTFP. The current intensity of CACER lies on the left side of the inflection point of the U-shaped curve. OFDI significantly positively influences the increase in GTFP and is a significant mediating variable in the relationship between ERs and GTFP. Moreover, the introduction of OFDI delays the appearance of the inflection point. Further analysis, taking into account the regional heterogeneity, indicates that the inverted U-shaped and U-shaped curve is still valid in the eastern and western area and that the mediating effect of OFDI on ERs in the western area is stronger than that in the eastern area. Based on these conclusions, policy implications are provided to improve GTFP in China.