The role of private sector investment in agriculture: A catalyst for sustainable development in Asia

Abstract

The agricultural sector is a crucial driver for sustainable development in many countries, as it directly or indirectly contributes to various United Nations Sustainable Development Goals. However, this sector requires increasing financial investment to rejuvenate and modernise production processes. This study investigates the impact of private sector investment on agricultural production across selected Asian countries from 2001Q1 to 2020Q4. The results of the Driscoll‐Kraay regression and the method of moments quantile regression reveal that private agricultural investment positively affects agricultural production. The findings indicate positive contributions from agricultural aid, domestic credit, and rural population, whereas remittances negatively affect agricultural production. The Dumitrescu‐Hurlin panel causality test results establish bidirectional causality between farm production and its determinants (private agricultural investment, agricultural aid, domestic credit, remittances, and the rural population). Based on these findings, we recommend that policymakers and governments incentivise and facilitate private agricultural investment to drive sustainable development. This strategy could boost agricultural productivity and enhance a more resilient agricultural system capable of withstanding environmental challenges while improving farmers' incomes and livelihoods.