Editor's Note: Kusi Hornberger is an Investment Policy & Promotion Specialist with the Investment Climate Advisory Services of the World Bank Group.
Despite the recent downturn in global FDI flows and predictions of gloomier times to come for cross border investment flows, there has been a recent increase in FDI by wealthy investors from resource poor countries. These investors have been snapping up large plots of land in developing countries for the development of agriculture exports. For the most part the deals have come from wealthy investors or state development funds in resource-poor countries into poor resource-rich countries, such as the lease of 30,000 hectares by the Abu Dhabi Fund for Development in Sudan.
A lot of attention has been paid to these deals including large features in the Economist magazine calling them “Outsourcing’s Third Wave”, from NGOs concerned about food security and even protests from many G8 countries who are concerned about the potential negative development consequences to the local citizens who currently live and work on these lands.
Yet little attention has been paid to how these transactions are happening and whether the investors are following the same processes and procedures as normal land lease deals involving foreign individuals or companies. The World Bank Group’s Investment Climate Advisory Service is aiming to fill this gap with a new set of indicators called the Investing Across Borders project. The project will include an indicator on Accessing Land that will help us understand how easily foreign investors can access land they are interested in leasing and what protections are in place both for investors and for the country and its citizens. The Accessing Land indicator as well as the rest of the IAB data should be available in early 2010, and with it, we’ll be able to give a better answer the question I started with: global land grab or good business?