Impact study of agricultural value added on foreign direct investment, economic development, trade openness for India following ARDL approach

Sharmiladevi, Jekka Chandrasekaran Article Impact study of agricultural value added on foreign direct investment, economic development, trade openness for India following ARDL approach Cogent Economics & Finance Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Sharmiladevi, Jekka Chandrasekaran (2023) : Impact study of agricultural value added on foreign direct investment, economic development, trade openness for India following ARDL approach, Cogent Economics & Finance, ISSN 2332-2039, Taylor & Francis, Abingdon, Vol. 11, Iss. 2, pp. 1-20, https://doi.org/10.1080/23322039.2023.2270595 This Version is available at: https://hdl.handle.net/10419/304249 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Cogent Economics & Finance ISSN: (Print) (Online) Journal homepage: www.tandfonline.com/journals/oaef20 Impact study of agricultural value added on foreign direct investment, economic development, trade openness for India following ARDL approach J.C Sharmiladevi To cite this article: J.C Sharmiladevi (2023) Impact study of agricultural value added on foreign direct investment, economic development, trade openness for India following ARDL approach, Cogent Economics & Finance, 11:2, 2270595, DOI: 10.1080/23322039.2023.2270595 To link to this article: https://doi.org/10.1080/23322039.2023.2270595 © 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. Published online: 24 Oct 2023. Submit your article to this journal Article views: 1453 View related articles View Crossmark data Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oaef20 DEVELOPMENT ECONOMICS | RESEARCH ARTICLE Impact study of agricultural value added on foreign direct investment, economic development, trade openness for India following ARDL approach J.C Sharmiladevi 1 * Abstract: This research aims to identify the impact of agriculture, forest and fishing value-added on international business, capital flow, and economic growth for India from 2000 to 2022, by examining short-term and long-term equilibrium using the Auto Regressive Distributive lag (ARDL) approach. Agriculture value added is taken as a dependent variable, and inward Foreign Direct Investment (FDI), stock of net FDI, economic growth and trade openness are taken as independent variables. Results indicate that there exists a long-term and short-term relationship between agriculture value added, economic growth and trade openness. Economic growth and trade openness have a statistically significant relationship with agricultural value added in the short and long run. Inward FDI and stock of FDI are not significant to agriculture value added. ARDL Bound test results indicate that there is a long-term cointegrating relation among the variables. The error correction term is also strong and significant (−13.96), suggesting resistance to shocks. Existing J.C Sharmiladevi ABOUT THE AUTHOR Sharmiladevi J.C., born in the temple city of Madurai in Southern India, got her doctorate from Bharathiar University, Coimbatore, India. She teaches courses in Economics and Management domains. Her research works are in the areas of Foreign Direct Investment, International Finance, Financial Inclusion, Open Economy Macroeconomics, Higher Education, and Research Methodology. She works at Symbiosis Centre for Management Studies, Pune Symbiosis International (Deemed University), Pune, India. She has presented papers in many international conferences and reviewed papers in Scopus-indexed journals. PUBLIC INTEREST STATEMENT Agriculture is the backbone of India and for many economies. Nations have overcome hunger and poverty, but food self-sufficiency and nutrition are still questionable. The focus and attention towards agriculture and allied sectors are blurring with time, leading to fundamental changes in food, health and wellness. General Opinions indicate that capital flow can bridge many development gaps and can bring growth. In contrast, a nation’s absorptive capacity and government policy play a synergistic role in creating new areas of development and enhancing the existing structure of the agrarian base. Through this paper, the author touches upon the connecting areas of agriculture, forest and fishing value added with foreign direct investment, economic growth, openness to trade and agglomeration and attempts to evaluate the implications and dynamics in the short and long term, suggesting policy implications on bringing sustainable agriculture, ecological balance and food self-sufficiency. Sharmiladevi, Cogent Economics & Finance (2023), 11: 2270595 https://doi.org/10.1080/23322039.2023.2270595 Page 1 of 20 Received: 16 June 2023 Accepted: 05 October 2023 *Corresponding author: Sharmiladevi J.C, Symbiosis Centre for Management Studies, Symbiosis International (Deemed University), Survey # 231, Near Lunkad Gold Coast, Viman Nagar, Pune, Maharashtra, 411014, India E-mail: [email protected] Reviewing editor: Goodness Aye, Agricultural economics, University of agriculture, makurdi benue state, Nigeria Additional information is available at the end of the article © 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent. literatures coverage on agriculture and international business is scarce in the Indian context, and this research will be significant in that line. The results of this study resonate with the findings of a few studies conducted in other geographical areas, indicating the fact that the receptivity and absorptive capacity prevailing in an economy play a dominant role in receiving maximum benefits from inward capital flow leading to economic growth. This research reinstates that agriculture still influences economic growth in India. Openness is essential for creating a conducive atmosphere for economic development. The study also indicates the direction for future research. Subjects: Development Studies; Economics and Development; Economics Keywords: agriculture value added; foreign direct investment; economic growth; trade openness JEL Classification: F14; F63 1. Introduction Food security is one of the prime agendas of the United Nations’ Sustainable Development Goals for eradicating poverty, promoting health and nutrition and ensuring sustainability. Our planet’s requirement for food is increasing in multi-folds. Growing food production demands a minimum of USD 80 to 83 billion investment annually for production and USD 300 billion per year in productivity enhancement. Promoting environmentally friendly technologies, expanding agricultural investment, research and extension systems, and enhancing farmers’ education accompanied by technology transfer from developed countries are the crucial components of policy implementations to improve food security (Havemann et al., 2020; Msuya, 2007; Rockström et al., 2009; United Nations UN, 2015). Agricultural and allied sector forms part of the global food system that ensures livelihood, health, equity, sustainability and economic growth (Liu, 2014). Global value added generated from agriculture, forestry, and fishing reached USD 3.6 trillion in 2020, with 65% contribution from the Asian region (FAO, 2022; Rockström et al., 2009). Agriculture, the home for 64.6 per cent of the population in India, is responsible for maintaining livelihoods as it supplies food and nutrients and is significant for rural development. The central role of agriculture in economic development has been debated for centuries; still, economic growth depends on the development of the agricultural sector, as the future depends on shared prosperity (Castaneda et al., 2016; Gollin et al., 2002; Schultz, 1964; Singer & Thorbecke, 1971). As many developing countries face increasing trends towards population, living standards and life expectancy, investment in agriculture and allied activities becomes a prerequisite for economic growth, income generation, industrialisation, food chain and for many upstream specialisations (Amendolagine et al., 2019; Datt & Ravallion, 1998; Dowrick & Gemmell, 1991; Punthakey, 2020; Schultz, 1964; Thirtle et al., 2003). Agricultural development also burdens the environment with many pollutants like nitrate, ammonia, methane and nitrous oxide into the atmosphere, which also reduces productivity due to soil degradation (Nelson & Maredia, 2001). Clearing forests for cultivation often leads to biodiversity issues endangering species, requiring substantial investment to mitigate climate change and improve production, creating gainful employment and value creation (Nyiwul & Koirala, 2022). Bringing a trade-off between agricultural development and ecological and environmental balance is challenging. Although opportunities are available to bring balance, available solutions are complex. To conduct balanced agricultural activities, huge investments are needed. With government spending on agriculture declining, most developing countries struggle to enhance agricultural investments. Sharmiladevi, Cogent Economics & Finance (2023), 11: 2270595 https://doi.org/10.1080/23322039.2023.2270595 Page 2 of 20 With low trade flows, the current Ukraine, Russia war and the subsequent sanctions on Russia are creating substantial challenges in the global food markets as many countries rely on Russian wheat and fertiliser imports (Behnassi & El Haiba, 2022; Osendarp et al., 2022; Parker, 2022). The Covid pandemic and the current geopolitical events are creating major implications on global supply that are closely linked with capital flows. Global air cargo is also affected due to air space bans between Russia and other countries (Guenette et al., 2022; Kennes et al., 2022; WTO, 2022). These inter-dependent geo-political happenings have major implications for food production, agriculture, supply chain, international business, FDI and economic growth. With insufficient outputs and poor income, overcoming food, land, and greenhouse mitigation gaps in food production and feeding the population can be an exorbitant challenge (Searchinger et al., 2019). International capital flows like Foreign direct investment (FDI) possess the inherent ability to successfully address the above challenges (World Bank, 2020). Endogenous growth theories emphasise that FDI is a key determinant of economic growth, as they have the potential to reduce unemployment and increase productivity (Chenaf-Nicet & Rougier, 2016; Lipsey, 2000). Advocates of agriculture-led growth hypothesis indicate that investment in agriculture and allied activities create infrastructure which is a prerequisite for economic growth, a catalyst for national output growth via its effect on rural incomes and provision of resources for transformation into an industrialised economy, that can enhance well-being significantly (Datt & Ravallion, 1998; Dowrick & Gemmell, 1991; Jones, 1985; Kadir & Amalia, 2016; McArthur & McCord, 2017; Ozturk, 2017; Schultz, 1964; Thirtle et al., 2003; Timmer, 1995, 2002). Openness to trade positively impacts agriculture, as it encourages and increases production (Joël & Glory, 2018). Investments in agricultural infrastructure and eliminating income inequalities by adopting measures aimed at increasing the households’ purchasing power, especially those in rural areas, are key drivers for improving food access in countries worldwide. Figure 1 illustrates the connection between FDI and other significant variables like agricultural investment, food production, trade openness, economic growth and sustainability. FDI Food Production Sustainability Economic Growth Trade Openness Agriculture Investment Figure 1. FDI relationship. Sharmiladevi, Cogent Economics & Finance (2023), 11: 2270595 https://doi.org/10.1080/23322039.2023.2270595 Page 3 of 20 Developing countries received the maximum share of FDI, but surprisingly, limited literatures examine the contribution of capital flows into agriculture. Therefore, this research aims to bridge this gap and empirically understand the dynamic relations among foreign capital flow, agriculture, international business, and economic growth, taking India as the sample country. Indian agriculture has been crucial in raising national income and ensuring food self-sufficiency. Currently, Indian agriculture is the global agricultural powerhouse by being the world’s largest producer of milk, pulses, jute, and spices, and has the world’s largest cattle herd (buffaloes). India is the second largest producer of rice, wheat, cotton, sugarcane, tea, groundnut, fruits, vegetables, and goat meat (Reserve Bank of India, 2022). This sector could withstand the COVID-19 shock and registered an above-average real growth of 3.6 per cent in 2020–21. When many nations were trying to pile up their food grains stock due to rising concerns of the pandemic, India was comfortable with buffer stocks of food grains with public stocks of cereals at 2.8 times as per norms (Reserve Bank of India, 2022). Supplying with healthy investments, the Indian agriculture sector can get the potential to feed the entire world, which makes this study vital. Anthropogenic emissions, climate change, overgrazing, subsistence farming, subdivision, and land fragmentation are some of the classical limitations of Indian agriculture, apart from others. Indian agriculture is facing many challenges, a few of them including but not limited to fragmentation, lack of awareness, and portfolio risks (WTO, 2022). Agriculture growth across different states in India is different due to various reasons like agro-climatic ecological conditions, cropping pattern, input usage, infrastructure support, yield levels, etc., and faced many changes since the introduction of the green revolution in 1960 (Chatterjee, 2017). The focus of most of the literatures are on identifying some of the conventional areas like determinants, impacts, effects, spillovers, and composition of FDI. With rising global capital flows across various sectors, literature studies about inward FDI in the primary sector are niche despite its significance. This research gap needs to be addressed. Further, the existing extant literature indicates contradictory results, leading to inconclusive evidence. The use of different variables, time periods studied, data sets and methodology adopted are also responsible for dissimilar results. Literatures that indicate the comparative overall effects and benefits of agricultural value added on economic growth, FDI and openness to trade are not done in the Indian context. India is the second largest recipient of inward FDI compared to other emerging economies. Studies on FDI follow a quantitative approach and overlook the endogeneity issues associated with the time series model. Considering the above issue, this study used the autoregressive distributed lag (ARDL) model and has overcome endogeneity and ensured stability. ARDL-bound testing ensures the presence/absence of cointegration. Further, the error correction estimation establishes the equilibrium relations and speed of adjustments of returning back to equilibrium after any potential shocks. This paper addresses the research issues with respect to understanding the impact and dynamics of agricultural value added upon FDI, international business and economic growth by following the ARDL approach, checking for the presence of cointegration, bounds test and error correction modelling. The rest of the paper covers literature reviews, methodology adopted, discussion of results, policy implications and direction for future research. 2. Literature review The literature survey consists of four sub-sections. The first sub-section deals with the review with respect to international capital flow and agriculture, covering dependency theory, modernisation theory and globalisation impact. The second sub-section reviews the literature on food production and agriculture; the third covers economic growth and agriculture, and the fourth deals with trade openness and agriculture. The three pillars of international capital flow and agriculture – the dependency theory, modernisation theory and globalisation impact, as mentioned by Mihalache O’Keef & Li (2011) reflect three different views about the nexus between capital flow and agriculture. Dependency theory indicates that inward foreign capital increases income inequality, leading to food insecurity and dependency (Matunhu, 2011). Modernisation theory indicates that foreign capital flow creates Sharmiladevi, Cogent Economics & Finance (2023), 11: 2270595 https://doi.org/10.1080/23322039.2023.2270595 Page 4 of 20 growth, benefiting the host and source country by disseminating knowledge, methods, and innovations that lead to transformation, thereby creating awareness and development. The globalisation view indicates that the globalisation-induced development outcomes of the late 20 th and early 21 st century are mostly in manufacturing and services trade and can be called financial globalisation rather than globalisation in general, leading to an imbalance within and between countries and within and between sectors, shifting agriculturist into manufacturing and service businesses (Nayyar, 2006). Nayyar also indicates that countries which received foreign investments were not able to develop their agricultural prowess as its progress is not dependent wholly on national characters, but it is deeply interwinded in international policy and political developments, regulatory mechanisms, etc. Few of the compliances and regulatory mechanisms, like the patenting of seeds and the presence of strong multinationals in farm equipment and inputs, crowd out small farms, resulting in multiple challenges (Hartungi, 2006). Reviews about dependency and modernisation theory embrace foreign capital for agricultural performances, while that of globalisation impact has shown mixed results with specific outcomes across regions. 2.1. Nexus between agriculture and food production FDI in agriculture guarantees food security, as it can expand the market, agro-technology, management expertise, and employment opportunities (Jiang et al., 2018), significantly creating positive impacts in the short run (Edeh et al., 2020). Nyiwul and Koirala’s (2022) study suggests that the primary sector receives mediumand long-term positive benefits from FDI and recommends improving institutional mechanisms in favour of foreign investments. Agricultural FDI promotes green total factor productivity (Wang et al., 2019), enhances national welfare by preventing unemployment (Chaudhuri & Banerjee, 2010), and positively influences food security by expanding land used for crop production (Santangelo, 2018). Studies conducted by (Almfraji & Almsafir, 2014; Bilal Khan et al., 2019; Magombeyi et al., 2018; Shamim et al., ; Ucal, 2014; Zaman et al., 2012) indicated that FDI established strong linkages, and these linkages are utilised for creating growth which are useful for poverty alleviation. For Africa, inward FDI directly impacts agricultural production and guarantees national food security by expanding the markets and bringing in new technology, managerial expertise, and employment, thereby reducing the burden on domestic capital and leading to moderating the effect of the government’s investment burden in research and development on agriculture production (Adom et al., 2018). Dhahri and Omri’s (2020) study explains that different types of foreign assistance impact agriculture production and can reduce food insecurity and poverty. In the meantime, Hartungi’s (2006) study believes that the influence of multinational companies (MNEs) can lead to fundamental changes in basic agricultural practices that can pose multiple threats to small farmers in developing countries. Further, this study also makes us think that the interference of the World Trade Organisation (WTO) with their regulatory mechanisms like seed patenting is most advantageous to developed countries and MNCs rather than to small farmers. Multiple literatures indicate positive impact of FDI on agriculture (Antwi et al., 2013; Baba Insah, 2013; Gameli Djokoto et al., 2014; Msuya, 2007; Oloyede, 2014; Sakyi, 2011). 2.2. Nexus between agriculture and economic growth Literature that studied the nexus between FDI and economic growth indicates three views – positive, negative and dependent. The positive view comes under neoclassical economic growth theory, indicating the positive impacts and endogenous growth effects. The negative view indicates the creation of inequalities like monopolies and income repatriations. The dependent view indicates the absorptive ability of the host country from FDI flows (El-Wassal, 2012). Few literatures on positive view includes, but not limited to (Bashir, 1999; Choong et al., 2010; Elkanj et al., 2013; Eller et al., 2005; Kumar & Pradhan, 2005; Lai et al., 2009; Li & Liu, 2005; Moran et al., 2005 and Samimi et al., 2010), literatures indicating negative views include (Chase-Dunn, 1975; Bornschier et al., 1978; Nolan, 1983;) literatures on dependent view include (Alfaro et al., 2004; Alfaro & Charlton, 2007; Ang, 2009; Antràs, 2003; Azman-Saini et al., 2010; Balasubramanyam et al., 1996; Blomstrom & Kokko, 1994; Borenzstein et al., 1998; Findlay, 1978; Mody & Murshid, 2005; Sharmiladevi, Cogent Economics & Finance (2023), 11: 2270595 https://doi.org/10.1080/23322039.2023.2270595 Page 5 of 20 Rajan & Zingales, 1998 and Wang & Blomström, 1992). Some studies also show no evidence of either positive, negative or dependent views, which includes - Carkovic and Levine (2005), and Mohamed et al. (2013). There exists a significant positive effect of FDI on domestic capital formation, as FDI generates technology diffusion (Borenzstein et al., 1998), creates innovative alternative management practices, and instrumental in enhancing skill, diffusion of knowledge, and technology (Balasubramanyam et al., 1996; De Mello, 1999), creates capital spillovers and paves way for knowledge transfer (Grossman, 1991; Lensink & Morrissey, 2001), faster GDP growth (Tian et al., 2004), enhance the speed of development of product varieties and quality, leading to international collaborations (Ikiara, 2003), adds to total factor productivity and income growth (Blomström et al., 2003; Chen & Démurger, 2002). Mihalache O’ Keff & Li’s (2011) extensive study confirms that FDI impact is not similar across primary, secondary and service sectors, and one needs to examine the firm-specific flow, composition and impacts of FDI across sectors syncing with other factors. Djokoto (2013) indicates that agricultural FDI crowds in domestic investment. Epaphra and Mwakalasya’s (2017) empirical study indicates poor to no significant effect of FDI inflows on the agriculture value added-to-GDP ratio. Iddrisu et al. (2015) found that FDI in agriculture negatively impacted agricultural productivity in the long run but created a positive effect in the short run. A recent study by Dinga (2023) indicates that agricultural value added is a suitable transmission mechanism through which GDP can affect ecological poverty. Another recent study by Zhao and Chen (2023) identified that agricultural investments are more tilted towards the developed countries, especially the USA, China and Russia, and food-insecure countries received only 20% of investments. The causality between agriculture value-added and FDI varies according to the region (Singh & Dhiman, 2023). Andrianarimanana et al. (2023) study suggests that FDI can boost the agriculture sector, especially in sustaining the spices supply chain. Lin and Yang (2017) panel study of ten sectors in China indicates that FDI can increase the degree of openness overseas for the agricultural product processing industry by narrowing the technology gap between the home and host countries. Climate Smart Agriculture (CSA) is adopted as a strategy for facing the challenges of climate change on food security. A lack of financial resources constrains the adoption of CSA (Amadu et al., 2020). Climate finance to support such initiatives needs hand holdings from private sector investments and public sector finance to create climate-resilient agricultural development. Conservation Agriculture (CA) has a significant role in addressing issues like food insecurity, climate change, biodiversity loss, environmental degradation, unsustainable diets and ill health (Kassam et al., 2022). Investments in creating climate-resilient agricultural development are likely to meet only a small share of total agricultural investment needs, estimated at US$ 209 billion per year by 2050, to increase production to meet the demand (Lipper et al., 2014). Review study by Nugroho and Lakner (2022) recommends certain changes to enhance the benefits of economic growth and agricultural development, especially for developing countries, like enhancing skill formation and capacity building, elimination of disincentive policies, and creating partnerships with industries in developed countries to intensify research and development. 2.3. Nexus between agriculture and trade openness Agricultural sector performance and trade openness positively impact economic growth as per studies conducted by Joël and Glory (2018); De Silva et al. (2013); Potelwa et al. (2016); Laiprakobsup (2014). More open economies attract substantial investments (Mazhikeyev et al., 2015). Latin American countries that followed import substitution industrialisation experienced less economic growth than the East Asian Tigers, who embraced an export-led growth strategy and received substantial growth rates (Pigka-Balanika, 2013). Agriculture value added can significantly diversify the export sector, minimising carbon dioxide emissions using advanced technologies (Wang et al., 2020). Trade openness created a positive effect on the agricultural performance of Belarus (Mourão, 2015). Two studies conducted across different periods, one in 1995–2009 (Djokoto, 2013), and another in 1980–2013 (Iddrisu et al., 2015), for Ghana, indicated dissimilar and opposite results on the impact of trade openness and agriculture. Djokoto’s study says that Sharmiladevi, Cogent Economics & Finance (2023), 11: 2270595 https://doi.org/10.1080/23322039.2023.2270595 Page 6 of 20 agricultural performance was not found to be significant with trade openness and FDI in the long run, but in the short run, it showed statistically negative results. Nevertheless, Iddrisu et al.’s study results indicated that the effect of trade openness on agriculture was positive and significant in the long run. Dissimilar results of these two studies indicate that, using different statistical techniques (ARDL in the former, cointegration in the later), the time period studied can impact the study outcomes to a larger extent. Openness as a factor influencing inward FDI, thereby leading to creating impacts, is scarcely studied in literatures. One segment of studies indicates that trade openness promotes competition, leading to increasing efficiency in all areas of production (Helleiner, 1994; Nishimizu & Page, 1982; Ricardo, 2020; Smith, 1776; Tybout, 1992). The place occupied by trade openness in the current dynamic world with non-competitive pricing and national protection needs to be analysed because openness is not leading to enhancement and uniform development in all countries (Adenutsi & Ahortor, 2008; Demery, 1994; Elbadawi, 1992; Elbadawi & Rocha, 1992; Killick, 2010; Todaro, 1995). A survey of the existing literatures on FDI in India indicates that more studies are concentrated in the manufacturing sector, followed by the service sector. As FDI received in the primary sector is very low, literatures that jointly studies agriculture and FDI are also less in number. An increasing number of studies are on understanding the determinants of inward FDI, which identifies different macroeconomic variables influencing inward FDI, followed by literatures about identifying the impact of FDI. Few studies are available on spillovers of FDI in different sectors of the economy, especially the manufacturing sector. We can see studies undertaken to check the advantages/disadvantages received by domestic and foreign firms due to inward FDI. Some studies identify the sectoral distribution and effects of FDI. Very few specific studies have been done on identifying the effect of inward FDI upon the primary sector, except for a few like Kaur et al. (2022); Glady (2019); Emir et al. (2022); and Naseem et al. (2021). Kaur et al. (2022) research indicates that agricultural FDI increases agricultural exports from India and enhances economic growth; Glady (2019) recommends the removal of barriers to FDI; Emir et al. (2022) study conveys that agriculture and FDI along with other variables favourably impact economic development and are also instrumental in causing environmental damage. Taking the electricity consumption in agriculture along with other variables, Naseem et al. (2021) study indicated an insignificant association between carbon dioxide emission and agricultural electricity use. Table 1 lists recent studies in the above-mentioned lines, indicating the extant literature available in this sector for India. From the literature survey above, one can understand that studies that examine the effects and impacts of agriculture and its allied sector upon international capital flow especially FDI have not taken the centre stage of FDI literatures. Further, studies focussing and identifying the impact of agriculture, forest and fishing value added upon foreign capital inflows, economic development and openness to trade in the Indian context are extant. This study intends to fill the gaps in the existing literature on FDI and agriculture. 3. Methodology This research is an applied research following empirical design. The objectives of this research are to identify the long-term and short-term impact of agricultural value added on FDI, international business and economic development and to understand the dynamic effect of agricultural value added on inward FDI, international business and economic development. Data source is the World Bank World Development Indicator, and the time period is from 2000 to 2022. 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Foods, 12(9), 1827. https://doi.org/ 10.3390/foods12091827 Sharmiladevi, Cogent Economics & Finance (2023), 11: 2270595 https://doi.org/10.1080/23322039.2023.2270595 Page 19 of 20 Appendix 1 Appendix 2 Variables At Level At First Difference AVA Constant 0.385(0.977) -4.975(0.00) Constant & Linear -3.449(0.07) -4.562 (0.00) None 4.360 (0.999) -3.628 (0.00) FDIN Constant -1.195(0.656) -6.258 (0.000) Constant & Linear -2.534(0.310) -6.200(0.000) None 0.999 1.140(0.928) -5.923(0.000) GDP Constant -0.880(0.774) -4.614 (0.00) Constant & Linear -1.687 (0.722) -4.700 (0.00) None 8.042 (1.00) -0.710 (0.395) IFDI Constant -2.372 (0.160) -5.133(0.00) Constant & Linear -2.202 (0.465) -5.073 (0.002) None -1.329 (0.164) -5.254 (0.00) TOP Constant -0.243(0.918) -4.561(0.00) Constant & Linear -0.800 (0.950) -5.113 (0.00) None -0.996 (0.276) -4.463 (0.00) Variable Description Variable Representation Description Agriculture Forest & Fishing Value added AVA Agriculture Forest & Fishing Value added (constant 2015 US$) Agglomeration IFDI Foreign direct investment, net inflows (% of GDP) Economic Growth GDP GDP Constant 2015 US$ Foreign direct investment net FDI NFDI Foreign direct investment net (BOP Constant US$) Trade Openness TOP Exports added to imports and divided by GDP Sharmiladevi, Cogent Economics & Finance (2023), 11: 2270595 https://doi.org/10.1080/23322039.2023.2270595 Page 20 of 20