TY - JOUR

T1 - Doomed to fail?

T2 - Why some land-based investment projects fail

AU - Nolte, Kerstin

N1 - Funding Information: I acknowledge funding by the European Commission - (Grant number: DCI-FOOD/2015/372-504 ) and a research stipend by the German Academic Exchange Service (DAAD) .

PY - 2020/9

Y1 - 2020/9

N2 - In recent years, an increased interest in farmland globally has led to the emergence of many land-based investment projects. Although most projects enter the production stage, a significant number also ends in failure. This paper asks why land-based investment projects fail. This is a crucial question as failed investment projects are unlikely to have any positive impacts on the host regions. I develop a conceptual framework to understand the determinants of failure and then use project-level data to empirically test these potential determinants drawing on survival analysis. I find that failure occurs globally but is concentrated on the African continent, with some countries exhibiting a particularly high risk of project failure. In addition, larger projects, projects growing agrofuels, and projects targeting land formerly used by smallholders or pastoralists are more likely to fail. In contrast, projects that involve domestic investors or take place in countries with better infrastructure are less likely to fail. The findings on the impact of host-country institutions on project failure are ambiguous and highlight the need for more localized institutional variables to better understand the role of institutions for project failure.

AB - In recent years, an increased interest in farmland globally has led to the emergence of many land-based investment projects. Although most projects enter the production stage, a significant number also ends in failure. This paper asks why land-based investment projects fail. This is a crucial question as failed investment projects are unlikely to have any positive impacts on the host regions. I develop a conceptual framework to understand the determinants of failure and then use project-level data to empirically test these potential determinants drawing on survival analysis. I find that failure occurs globally but is concentrated on the African continent, with some countries exhibiting a particularly high risk of project failure. In addition, larger projects, projects growing agrofuels, and projects targeting land formerly used by smallholders or pastoralists are more likely to fail. In contrast, projects that involve domestic investors or take place in countries with better infrastructure are less likely to fail. The findings on the impact of host-country institutions on project failure are ambiguous and highlight the need for more localized institutional variables to better understand the role of institutions for project failure.

KW - Farm survival

KW - Land-based investments

KW - Large-scale land acquisitions

KW - Survival analysis

UR - http://www.scopus.com/inward/record.url?scp=85088878068&partnerID=8YFLogxK

U2 - 10.1016/j.apgeog.2020.102268

DO - 10.1016/j.apgeog.2020.102268

M3 - Article

AN - SCOPUS:85088878068

VL - 122

JO - Applied geography

JF - Applied geography

SN - 0143-6228

M1 - 102268

ER -