The theory of the investment development path and agriculture in Eastern Europe

Abstract

The outdated investment development path results in Eastern Europe and the lack of focus on the agricultural sector necessitated this study. The generalised least squares estimator employed countries from 1993 to 2021 for agricultural sector data on 17 Eastern Europe. Eastern European agriculture is in the early phase of stage IV of the investment development path, consistent with the theory of the investment development path. Human capital enhanced net foreign direct investment. Agricultural trade openness, exchange rate, and inflation did not influence net foreign direct investment. Developed and transition countries in Eastern Europe were not distinguished regarding net foreign direct investment. Eastern European countries must increase agricultural growth relative to population growth. This would increase agricultural development. The increased income can be saved and channelled into domestic investments to spur additional growth. This would make capital available for export. The growth in human capital must be sustained to enhance technical know-how in agriculture that would accompany agricultural capital export. Agricultural sector managers of Eastern European countries must focus on enhancing the sector's supervisory and regulatory functions. The goal should be to reduce the costs of doing agricultural business through effective facilitation towards efficient agricultural markets.