The Role of Institutional Quality, Foreign Direct Investments, Financial Development and Official Development Assistance in Promoting Agricultural Development in Africa

The study comprehensively examines the effect of institutional quality, foreign direct investments (FDI) and official development assistance on agricultural development in Africa, which has not been effectively explored in the existing literature, particularly in an analytical framework that accounts for varied sources of capital accumulation and their externalities. Using a panel data set of 44 African countries, covering the 2009–2020 period, we performed fixed and random effects and generalized method of moments regressions to determine the impact of institutional quality, FDI, domestic credit to the private sector, and official development assistance (in agriculture, fishing and forestry value added) on agricultural development while controlling for other variables such as agriculture's share in total employment, gross fixed capital formation (in agriculture, fishing and forestry value added) and arable land per capita. The key results are that official development assistance and agriculture's share in total employment positively influence agricultural value added, while domestic credit to the private sector has a negative effect on agricultural value added. The study concludes by discussing the policy implications of the findings.