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“Land Grab” or Development Opportunity? The Effect of Transnational Farmland Investments on the Ghanaian Economy
Author(s) -
Choi Donggul
Publication year - 2018
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/deve.12157
Subject(s) - economics , agriculture , investment (military) , capital (architecture) , production (economics) , labor intensity , foreign direct investment , pace , capital deepening , consumption (sociology) , general equilibrium theory , labour economics , agricultural economics , capital intensity , business , human capital , capital formation , market economy , financial capital , geography , macroeconomics , social science , archaeology , geodesy , sociology , politics , political science , law
Transnational investments in farmland in developing economies are recent and controversial. While they bring developmental opportunities including capital deepening, new technology, and employment opportunities, there are also concerns about the dislocation of local farmers and insufficient compensation for land use. This paper investigates how these seemingly conflicting effects interact in the process of economic growth by fitting a dynamic general equilibrium model to Ghanaian data. The differing effects of two common foreign investment activities, grain farming and biofuel production, are investigated. Grain farming investments tend to promote capital accumulation and increase income and consumption over the transition, whereas labor income is adversely affected. Biofuel projects induce the reverse. Results identify the relative labor intensity of technology on foreign‐operated farms, which affects the returns to domestic capital and the pace of capital deepening, as a major determinant of the long‐term effect of farmland investments.