Will Foreign Capital Build Food Systems in Developing Countries?

Abstract

Agribusinesses around the globe have become increasingly optimistic about prospects for growth in world food trade, especially the increased demand emerging among developing countries. Rapidly growing economies across Asia and Latin America and the emergence of China as a net importer of food have added to the optimism. Growth in the world food market, however, will depend critically on the availability of capital to finance improvements in food production, processing, and distribution systems in developing countries. Thus the question arises: Will limited capital supplies short-circuit growth in the world food market? In this paper we address this question in three steps. First, we sketch the outlook for the world food market, considering some of the major shifts that appear to be changing the market's direction. Second, we consider the capital demands of the food market as it changes course. And finally, we examine the most likely sources of capital for the food market's investment needs.