The Globalization of Farmland: Theory and Empirical Evidence

IMF Working Papers, June 22, 2018

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This paper is the first to provide both theoretical and empirical evidence of farmland globalization whereby international investors directly acquire large tracts of agricultural land in other countries.
An empirical test of the model using global data on transnational deals shows that international farmland investments are on the aggregate likely motivated by re-exports to investor countries rather than to world markets.
This contrasts with traditional foreign direct investment patterns where horizontal as opposed to vertical FDI dominates.

Explains the geography of farmland acquisitions as a function of cross-country differences in:
- technology
- endowments
- trade costs
- land governance

Empirical test uses global data on transnational deals.
Key empirical conclusion:
- International farmland investments are on the aggregate likely motivated by re-exports to investor countries rather than to world markets.
Contrast with traditional FDI patterns:
- Farmland globalization aligns with vertical FDI motives (re-exports/platform FDI) rather than horizontal FDI.

Subjects: Agricultural commodities, Agricultural policy, Agricultural sector, Balance of payments, Commodities, Economic sectors, Foreign direct investment, Labor
Keywords: Agricultural commodities, Agricultural policy, Agricultural sector, Asia and Pacific, dummy variable, Food Independence, Foreign direct investment, Global, host-country remoteness, investor country, investor-country remoteness, land acquisition, Land Governance, Large-Scale Land Acquisitions, Middle East, North Africa, Platform FDI, remoteness term, Sub-Saharan Africa, WP

The Globalization of Farmland: Theory and Empirical Evidence, WP/18/145, June 2018
- The Globalization of Farmland: Theory and Empirical Evidence, WP/18/145, June 2018 (Markdown version)
- The Globalization of Farmland: Theory and Empirical Evidence, WP/18/145, June 2018 (PDF)