Foreign direct investment (FDI) and the global food crisis. A study of the Windward Islands ’ agricultural sector.

Using panel data unit root tests and Johansen Co-integration tests, as well as the Engle-Granger-correction model to test for causality, this study examines the effect of FDI on agriculture sector productivity (x6), market size (x2), macroeconomic performance (x3), infrastructure (x4), competitiveness (x5), financial performance (x7) and governance (x8), in a sample of five Caribbean countries over the period 1970-2006. According to UNCTAD (2008), FDI is defined as investment made from outside of the economy of the investor with the objective of acquiring a lasting interest in or effective control over an enterprise. The results suggest that in general when evidence of causality is observed it runs from FDI to (x4). No causality was detected in either direction for (x2), (x5), (x6) and (x8). However, causality runs from FDI to (x3). A major policy implication of the findings is that the agriculture sector does not impact significantly on the attraction of FDI in these countries