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Localised or transboundary? Spatial spillover effects of foreign direct investment on Africa's agricultural export competitiveness

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  • Mabeta, Joshua
  • Smutka, Luboš
  • Lin, Xiang

Abstract

Agricultural export competitiveness is shaped not only by a country's own production capacity and scale but also by developments in other countries, as improvements elsewhere may alter relative market positions through competition and spatial interdependence. Foreign Direct Investment (FDI) represents one important channel through which such cross-country externalities may arise. However, much of the existing country-specific literature overlooks spatial interdependencies among countries, particularly in the agricultural sector. This study examines the impact of aggregate FDI on agricultural export competitiveness across 52 African economies, explicitly accounting for spatial spillovers and cross-sectional dependence. Employing a Spatial Autoregressive (SAR) model, the analysis finds that FDI exerts a positive direct effect on a host country's agricultural export competitiveness, but does not find strong evidence of negative externalities of FDI on neighbouring or nearby countries. Any observed negative spatial effects are largely attributable to disparities in the scale of agricultural production rather than to FDI-related displacement. Furthermore, the analysis finds no evidence of heterogeneous FDI effects on agricultural export competitiveness between landlocked and coastal countries, nor across major African regional economic groupings relative to the Southern African Development Community (SADC), while countries outside these groupings exhibit significantly stronger FDI effects. These results suggest that strengthening agricultural export competitiveness in Africa should prioritise attracting FDI at both national and regional levels, as its positive domestic effects are not offset by statistically significant losses in neighbouring countries, while regional coordination remains essential for managing scale-driven spatial competition.

Suggested Citation

  • Mabeta, Joshua & Smutka, Luboš & Lin, Xiang, 2026. "Localised or transboundary? Spatial spillover effects of foreign direct investment on Africa's agricultural export competitiveness," International Review of Economics & Finance, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:reveco:v:106:y:2026:i:c:s1059056026000754
    DOI: 10.1016/j.iref.2026.104962

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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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