The impacts of economic globalization on agricultural value added in developing countries

Abstract

Countries in the world have various indices for the implementation of economic globalization (EG). This refers to positive and negative impacts arising from its implementation, especially in agriculture. This sector is still a basic source of existence in developing countries. At the same time, these countries have been unable to optimize their agricultural value-added (AVA) and only earn a low level of income. That way, developing countries need to take advantage of EG to increase income from agricultural exports and farmers’ welfare. Other than that, there has been no study examining the impacts of EG on AVA in developing countries. So, this study intends to evaluate the impacts of the exchange rates, foreign direct investment (FDI) inflows, total agricultural export values, agricultural import duties, and fertilizer imports on AVA in developing countries. The panel data technique is used to assess its impact in 17 developing countries during 2006–2018. The study showed that FDI inflows and agricultural export values increase AVA in developing countries. In this study, EG positively impacts developing countries, but its implementation must pay attention to achieve sustainable development goals. We recommend developing countries focus on investments in human capital and technologies (or R&D), ensure foreign investors collaborate with local agricultural firms, increase agricultural exports, and create a conducive economic system