Foreign Direct Investment (FDI) in Land in developing countries

22(processing) may offer additional revenues, andthus stimulate economic growth. Increasedcommodity production for exports generatesforeign currencies and additional taxes and mayexpand the scope of national governments toinvest in projects that improve living conditions.Negative effects of FDI in land may affect thefollowing areas:• Reduced food security in the target countrywhen food crops are not available for localconsumption (e.g. export or replacement withindustrial crops). This is of outstanding importancein light of the human right to food. Asa matter of fact, some of the relevant targetcountries for FDI in land are dependent onfood aid e.g. Madagascar, Sudan or Cambodia(Haralambous et al., (IFAD), 2009).• Biased distribution of benefits in favour of theinvestor or just some parts of the local population,not alleviating poverty but fueling socialconflicts. Additionally, the states’ bureaucracymay appear in the bargaining process due tocorruption or ineffective governance controlmechanisms. This does not only reflect welfarelosses, but leads to less acceptance of FDI inland.• Competition in land use for food, animal feed,and agro-fuels with the poor suffering from highprices for land and water resources.• Increase of local and regional unemploymentwhen applying labour extensive mechanisation.As very often women are involved in cropproduction, they can be most affected by thisdevelopment.Specific problems may occur if water is a scareresource and FDI in land leads to a change in theavailability for local farmers. The above mentionednegative effects may be intensified.It is often argued that FDI in land is related toland that is marginal, “underutilised” or “abandoned”and, therefore, does not negatively affectthe local economy.Marginal landMarginal lands are lands with very low productivity and difficult to cultivate due to naturaland economic conditions (e.g. climate, soil properties, soil degradation, lack of marketaccess). Marginality does not imply that land cannot be used or improved. Marginal landsare often used as pasture, for the production of fuel wood and for some food crops incountries where land is rare.UnderutilisedUnderutilised lands are characterised by the fact that its production capacities and its rateof return are not fully exploited.Abandoned landAbandoned land is land that was used before and is now abandoned because of market and/or political developments.