Economic growth and investment in the agricultural sector in Mexico during the period 1993–2022

Resumen

Objective: to analyze the behavior of the agriculture sector during the period 1993–2022, as well as investment in Mexican agriculture, in order to identify those factors contributing the most to the economic growth of the sector.

Design/ Methodology/ Approach: the two-stage Ordinary Least Squares (OLS) method was used. Subsequently, the corresponding elasticities (E) were obtained for each of the variables included in the analysis.

Results: results indicated that both the growth of agricultural GDP and the interest rate of the 91-day certificate CETES significantly influence foreign direct investment– FDI. However, results suggest that FDI has a limited impact on agricultural GDP growth, because a 1% increase in FDI causes only a marginal increase in the GDP of the sector. On the other hand, gross fixed capital formation shows a positive and significant effect.

Limitations/ Implications of the study: the lack of data complicated the development of the model, since there were multiple variables that could have explained the behavior of investment and economic growth in the agricultural sector.

Findings/ Conclusions: Gross fixed capital formation– GFCF is crucial for GDP growth in agriculture. However, the lag in investment in infrastructure and machinery continues to be a challenge for the agriculture sector in Mexico, limiting ability to grow at a faster pace. Increasing investment could create an environment that benefits both that sector, and Mexico’s domestic economy.