Foreign development investment and supply chains in horticulture: Diversifying exports and reducing poverty
This working paper (PDF) by the Center for Global Development looks into supply chain creation in horticulture in Africa, Latin America and other developing regions. It looks at the role of foreign investors in launching export, examines similarities and differences with the spread of supply chains in manufacturing and assembly and examines the role of retailers and impact of international standards. Developing countries that manage to upgrade and diversify their export base experience faster growth and enjoy greater welfare gains than those that do not. This investigation of supply chain creation in horticulture highlights the importance of individual first-mover investors and retailers. Policies that attract multinational investors and retailers to link them to production and export opportunities in the host economy are important. Public-private partnerships for skill-building in farming and agribusiness constitute a strong magnet to attract foreign investors in horticulture. The most important ingredients in creating successful supply chains in horticulture contribute to a race-to-the-top among potential host countries in the developing world. A race-to-the-top in improving national doing-business indicators, in upgrading local infrastructure, in establishing effective investment promotion procedures, and in launching public-private vocational-training partnerships in farming and agribusiness. The paper thus demonstrates that expansion of international investment in horticultural supply chains offers significant potential for export diversification and poverty reduction in economies all across the developing world. Multilateral development banks and national aid donors might want to assign high priority therefore to investment promotion in horticulture, backed by the infrastructure upgrades needed to ensure success.