Determinants of foreign direct investment in Egypt's agriculture

Abstract EN

This paper aims to explore the determinants of Foreign Direct Investment (FDI) in the agricultural sector in Egypt on both the sectoral and national levels.

The paper used quarterly series data from July 2008 to June 2018 for agricultural FDI in Egypt as dependent variable, and eleven macroeconomic and agricultural economics exogenous variables.

Ordinary Least Squares (OLS) and Weighted Least Squares (WLS) regression techniques were employed.

The paper results revealed that the most important determinants of FDI in Egypt's agriculture were the exchange rate of US$, lending and discount given to economic sectors, and interest rate, in addition to the agricultural market size, main agricultural exports, and main agricultural imports.

Data about water abundance, fiscal expenditure on agriculture and political stability index were not available to the authors at the time of the study in quarterly basis.

Therefore, researchers are encouraged to consider them in further studies.

The paper includes implications for attracting more FDI to the Egyptian agricultural sector via utilizing the positive impacts of the flotation of the Egyptian pound, the increased lending and discount given to the economic sectors and the current imports substitution policy on FDI in Egypt's agriculture.

This paper contributes and fills the existence gab in the literature by providing empirical evidence on the determinants of agricultural FDI in Egypt.