Foreign direct investment inflows in agriculture, agriculture growth, and poverty in selected sub-organization of Islamic cooperation countries

Foreign direct investment (FDI) inflows are used to address the economic problems, such as poverty and agriculture growth. Encouraging the FDI inflows in agriculture is the most effective way to address poverty and food deficit issues in the Organization of Islamic Cooperation (OIC). Generally, this study attempts to examine the three-way relationships among FDI inflows in agriculture, agriculture growth and poverty. Specifically, the objectives of the study are to investigate the role of agriculture growth and poverty to increase FDI inflows in agriculture; to determine the impacts of FDI inflows in agriculture and poverty on agriculture growth; to examine the influences of FDI inflows in agriculture and agriculture growth on the poverty levels; and to test the relationships among FDI inflows in agriculture, agriculture growth and poverty. The Fixed Effects Model and the system Generalized Method of Moments were used to empirically analyze the variables of interest. This study used panel data of 31 selected OIC countries for the period of 2000-2015. The framework of the study is based on the Keynesian and liberal framework, the Cobb–Douglas production framework and the Dunning Ownership, Location, and Internationalization (OLI) framework. The findings of the study show that agriculture growth and poverty have a significant relationship with the FDI inflows in agriculture; FDI inflows in agriculture and poverty influence agriculture growth; and agriculture growth and FDI inflows in agriculture have a negative significant relationship with the poverty. Moreover, FDI inflows in agriculture have bi-directional causal relationships between agriculture growth and poverty. Agriculture growth has a significant effect on FDI inflows in agriculture and poverty. There is a bi-directional causal relationship from poverty to agriculture growth. The findings of this study suggest a new trade policy recommendations for attracting FDI inflows in agriculture, whether it is targeting on agriculture growth or poverty reduction.