Increasing Agricultural Productivity:
Encouraging Foreign Direct Investments in the COMCEC Region
75
attract agricultural FDI. As has been indicated in this section, location benchmarking could
function as valuable tool to exactly indicate the weak spots.
Turkey’s strengths in attracting FDI in the agricultural sector, especially from Arab countries,
are increasing. The combination of a large population and domestic market, robust economic
growth and rising incomes, access to a huge and wealthy European market, a temperate climate,
a generally positive investment climate, and a combination of government support and private
initiative in advancing agricultural technology in such areas as seed and soil science and
greenhouse production mean that Turkey will become increasingly attractive as an FDI
destination for companies in the Arab world as well as those in Europe, North America, and
other regions. Investment in Turkey’s agricultural sector offers more dimensions than in many
of the less-developed COMCEC Member Countries and is also less subject to the kind of
controversy and opposition associated with accusations of “land grabs” in many African
countries. If there is one factor that contributes to a positive investment climate, it is regulatory
stability. History has shown that abrupt changes can transform a favourable investment climate
into an unfavourable one almost instantly, often destroying a positive reputation that may have
taken years to develop.
4.3 Case III Ethiopia Risk and Challenges of Agricultural FDI
Although agriculture accounts for less than five per cent of the FDI stock in Africa, the
agricultural sector has been one of the fastest-growing recipients of FDI over the past decade,
increasing at an annual average of more than 17 percent between 2003 and 2010. 102 Ethiopia is
one of the largest recipients of this FDI. Although its population of nearly 90 million is the
second largest in sub-Saharan Africa, Ethiopia has an abundance of available farmland for
investment, with permanent crops taking up approximately 1.1 million hectares, or eight per
cent, of the 14.6 million hectares of total arable land.103
Ethiopia is one of the poorest and least developed countries in the world, with nominal per
capita GDP of $400, or 188th out of 194 countries and per capita GDP in PPP terms of $1,139, or
169 th out of 182 countries, 104 and ranked 173rd out of 187 countries on the United Nations
Human Development Index.105 Ethiopia also has one of the world’s fastest growing economies,
with an average real annual GDP growth of 9.1 percent over the past 10 years.106 Unlike many
fast-growing economies, especially in Africa, Ethiopia’s growth is not dependent on energy or
mineral resources but is based instead on agriculture and services.
102 World Bank, 2011
103 FAOSTAT, 2013
104 World Bank Development Indicators, 2013 (2012 figures)
105 United Nations Development Programme, 2013
106 World Bank Development Indicators, 2013.