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Foreign Direct Investment and Perceived Agribusiness Performance in Nepal: Evidence From Firm-Level Data

Anoj Joshi, Durga Devkota, Kapil D. Subedi, Bimala R. Poudyal

Abstract


Foreign direct investment (FDI) may contribute to the development of agribusiness, but its contribution to firm performance is not uniform, particularly in least developed countries such as Nepal. This study uses survey data from 105 respondents representing 44 FDI-approved agribusiness firms to examine how FDI is related to agribusiness performance in Nepal. Pearson correlation and regression analyses were employed to examine three key dimensions of FDI viz., financial capital, technology transfer, and managerial know-how. The findings revealed that technology transfer and financial capital were significantly associated with agribusiness performance, with technology transfer emerging as a consistent predictor across the models. Technology-driven FDI demonstrated a positive association with nonfinancial and overall performance, while financial capital was more strongly associated with financial performance. Meanwhile, the FDI in the form of managerial know-how showed positive associations with firm performance but the effects were not statistically significant as shown by the results of multivariate analysis. A firm-level Welch’s one-way ANOVA further revealed significant differences in overall performance across firm-size categories; with the significant pairwise difference occurring between medium-sized and large firms. Overall, the results suggest that the different forms of FDI have differential associations with agribusiness performance, confirming firm-level evidence from a least developed economy and suggesting policy insights for designing capability-enhancing FDI strategies in Nepal.

Agribusiness performance; Financial capital; Firm-level study; Foreign direct investment; Nepal; Technology transfer


Keywords


Agribusiness performance; Financial capital; Firm-level study; Foreign direct investment; Nepal; Technology transfer

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DOI: 10.33687/ijae.014.02.6219

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