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This study explores how institutional quality modulates the effect of foreign direct investment inflows into agriculture on the agricultural exports of emerging nations. The main purpose of our analysis is to find and quantify the export effects of foreign direct investment in the sector as well as the modulating effects of institutional quality on the foreign direct investment – agricultural export nexus. The study used secondary data from various sources covering 44 sub–Saharan African (SSA) countries for the period 2000 to 2020. The data were analyzed using the fixed effect model (FEM) and general moment method in system (SGMM) for robustness. The findings suggest that a given level of institutional quality is needed to attract foreign direct investment to improve agricultural exports. Thresholds of institutional quality needed for the foreign direct investment to promote agricultural exports are also provided. The established thresholds are as follows: (i) 1.000 ‘government effectiveness’; (ii) 0.200 ‘political governance'; (iii) 0.375 ‘economic governance’; (iv) 0.444 ‘institutional governance' and (v) 0.500 ‘general governance.’ Policies aimed at strengthening institutional quality in SSA countries should be backed by measures aimed at avoiding foreign direct investment mismanagement to improve agricultural exports.
Akpa et al. (Thu,) studied this question.