Spillovers

Interstate and international spillovers from public agricultural research and development (R&D) investments account for a significant share of agricultural productivity growth. Hence, spillovers of agricultural R&D results across geopolitical boundaries have implications for measures of research impacts on productivity, and the implied rates of return to research, as well as for state, national and international agricultural research policy. In studies of aggregate state or national agricultural productivity, interstate or international R&D spillovers might account for half or more of the total measured productivity growth. Similarly, results from studies of particular crop technologies indicate that international technology spillovers, and multinational impacts of technologies from international centres, were important elements in the total picture of agricultural development in the 20th Century. Within countries, funding institutions have been developed to address spatial spillovers of agricultural technologies. The fact that corresponding institutions have not been developed for international spillovers has contributed to a global underinvestment in certain types of agricultural research.     

EVALUATING RETURNS TO RESEARCH IN PASTURE IMPROVEMENT*

The objectives of the study reported here were (a) to attempt to identify pasture research findings which have been important for the development of improved pastures in a number of agricultural regions, and (b) to estimate the internal rates of return on the investment in pasture research in these regions. The technique used was the estimation of input-demand functions for the stock of improved pastures. It is shown that the important research results were mainly the result of research in plant nutrition. Adoption lags were estimated, and these were short by comparison with those usually derived by other methods. Internal rates of return calculated for successful research findings were very high, hut there were important differences between regions.     

Measuring public agricultural research and extension and estimating their impacts on agricultural productivity: new insights from U.S. evidence

This article provides new estimates of the marginal product of public agricultural research and extension on state agricultural productivity for the U.S., using updated data and definitions, and forecasts of future agricultural productivity growth by state. The underlying rationale for a number of important decisions that underlie the data used in cost‐return estimates for public agricultural research and extension are presented. The parameters of the state productivity model are estimated from a panel of contiguous U.S. 48 states from 1970 to 2004. Public research and extension are shown to be substitutes rather than complements. The econometric model of state agricultural TFP predicts growth rates of TFP for two‐thirds of states that is less than the past trend rate. The results and data indicate a real social rate of return to public investments in agricultural research of 67% and to agricultural extension of 100+%. The article concludes with guidance for TFP analyses in other countries.     

A COMPARISON OF PROCEDURES FOR ESTIMATING RETURNS TO RESEARCH USING PRODUCTION FUNCTIONS

The production function approach has been one of the two main ex-post procedures used to estimate the rate of return to agricultural research. A critical part of estimating the marginal internal rate of return (MIRR) is the procedure adopted to spread the benefits of research through time. Past studies using this approach have given only brief consideration to this computational procedure. The objective in this study was to review the different computational procedures used and, then, using cross-section production function estimates for U.S. agriculture, determine whether the MIRR estimates are sensitive to the computational procedure used. The results from this comparison indicate a large range in the estimates. The implication, then, is that careful consideration should be given to the choice of computational procedure, both when undertaking such a study and when comparing the results of different studies.     

Publicly-funded UK agricultural R&D and 'social' total factor productivity

Most studies concerned with measuring the rate of return to publicly‐funded agricultural R&D investment have found high returns, suggesting under‐investment, and calls for increased expenditure have been common. However, the evaluation of returns tends to measure the effect of research expenditure against growth in total factor productivity (TFP), based on market inputs and outputs. When compared against growing public unease over the environmental effects of pursuing agricultural productivity growth, TFP indices become a misleading measure of growth. This paper integrates some non‐market components into the TFP index. The costs of two specific externalities of agricultural production, namely fertiliser and pesticide pollution, are integrated in a TFP index constructed for the period 1948–1995. This adjusted, or ‘social’, TFP index is measured against UK public R&D expenditures. The rates of return to agricultural R&D are reduced by using the ‘social’ as opposed to the traditional TFP index. Whilst both remain at justifiable levels, previous studies appear to have over‐estimated the effect of agricultural R&D expenditures. Furthermore, with changes in policy towards more socially acceptable but non‐productivity enhancing outcomes, such as animal welfare, rural diversification and organic farming, the future framework for analysing returns to agricultural R&D should not be so dependent on productivity growth as an indicator of research effectiveness.     

Research returns redux: a meta-analysis of the returns to agricultural R&D

A total of 289 studies of returns to agricultural R&D were compiled and these provide 1821 estimates of rates of return. After removing statistical outliers and incomplete observations, across the remaining 1128 observations the estimated annual rates of return averaged 65 per cent overall — 80 per cent for research only, 80 per cent for extension only, and 47 per cent for research and extension combined. These averages reveal little meaningful information from a large body of literature, which provides rate-of-return estimates that are often not directly comparable. This study was aimed at trying to account for the differences. Several features of the methods used by research evaluators matter, in particular assumptions about lag lengths and the nature of the research-induced supply shift.     

Recalibrating the reported returns to agricultural R&D: what if we all heeded Griliches?*

Zvi Griliches’ seminal analysis of hybrid corn spawned a large literature seeking to quantify and demonstrate the value of agricultural research and development (R&D) investments. The most important metric for quantifying the rate of return to R&D emerging from this literature is the internal rate of return (IRR), even though Griliches was sceptical of its usefulness as a metric in this context. An alternative metric, also reported by Griliches but not as commonly used in the subsequent returns‐to‐research literature, is the benefit–cost ratio (BCR). We assess how the implications of the returns to agricultural R&D literature may have differed if the BCR had become the standard rather than the IRR. We reveal that the IRR and BCR produce substantially different rankings of agricultural R&D projects, differences that persist even under various commodity and geographical aggregations of the BCR and IRR estimates. The median across 2,627 reported IRRs is 37.5 per cent per year. Using data gleaned from 492 research evaluation studies, we developed and deployed a methodology to impute 2,126 BCRs (median of 5.4) and modified internal rates of returns (MIRRs, median of 16.4 per cent per year) assuming a uniform 10 per cent per year discount rate and a 30 year research timeline.     

Estimating overall returns to international agricultural research in Africa through benefit-cost analysis: a "best-evidence" approach

This study offers a "best evidence" approach to summarizing recent benefit-cost analyses of international agricultural research in Africa. First, from an extensive literature review and the resulting global inventory of impact studies, 23 studies are identified that calculate aggregate rates of return for Consultative Group on International Agricultural Research (CGIAR) and partner investments in Sub-Saharan Africa (SSA). These studies are then appraised against a review framework consisting of principles, criteria, and indicators for study rigor. Subsequently, the economic benefits reported by studies grouped on the basis of its analytical rigor are aggregated and set against total investment by the CGIAR and national agricultural research systems to determine if the total investment to date can be justified by documented benefits under a range of assumptions. As a result, the study finds that aggregate investment is justified under a fairly wide range of suppositions. Under all scenarios, the vast majority of documented benefits stem from a relatively limited array of activities with a majority of benefits stemming from biological control (80%). Close to 20% of total benefits result from crop genetic improvement, and less than 1% result from all other activities. The implications of these results for research investment strategies in SSA and impact assessment are discussed.     

The Economic impact of public agricultural research and development in the United States

In this article, we examine the relationship between public investments in agricultural research and development and the productivity‐enhancing benefits they generate. Knowledge productivity functions are estimated for U.S. agriculture using data on multifactor productivity and public knowledge stocks. We examine the time‐series properties of the data and compare alternative econometric estimation procedures. The results are used to calculate economic performance measures such as internal rates of return and benefit‐cost ratios. The real rate of return to public investments in agricultural research and development in the United States is in the range of 8–10% per annum.     

Evaluating research and education performance in Indian agricultural development

India's agricultural research spending has long been regionally uneven. Regional research intensity ratios, which account for size differences, indicate research spending has consistently favored southern and western states over northern, central, and eastern ones. Farm production patterns have, however, changed in recent years and regional output growth is being driven by new commodity mixes. In this article, we ask which region had the highest factor productivity growth and rate of return to investments in public agricultural research and higher education. Our analysis relies on a 1980–2008 Indian agricultural production and policy data set together with a dual heteroscedastic production frontier to decompose total factor productivity (TFP) growth into formal technical progress and efficiency elements. The model's regional flexibility affords region‐to‐region comparison of multiple research return rates, TFP growth, and the elements influencing them. Regardless of return‐rate measure or allocation scenario evaluated, the North has enjoyed the highest return to research spending, and the Central and East the lowest. Factor productivity growth has however been strongest in the South, primarily on account of efficiency gains. Overall, though, the technical progress and productivity growth easily attributable to government‐supported research has accounted for about one‐quarter of the sector's TFP growth.     

The Calculation of returns to research in distorted markets: Comment

In a recent article, Oehmke reported that a high internal rate of return for investment in research when the interaction between research and price policy costs was disregarded could become very low or even negative when the effects of research on the costs of price policy were considered. In this paper, the social returns from research in the presence of the price policies considered by Oehmke are reexamined using a simple geometric approach. The analysis suggests that an output subsidy in a small importing economy, an output subsidy in a closed economy, and a target price in a large exporting economy will on Oehmke's assumptions - cause only small reductions in the internal rate of return from investment in research. This implies that the apparent underinvestment by governments in agricultural research cannot be explained away by a large upward bias, known to governments, in measured rates of return due to failure to account for interactions between research and the costs of price policy measures.     

International and Institutional R&D Spillovers: Attribution of Benefits among Sources for Brazil's New Crop Varieties

Reported rates of return to agricultural R&D are generally high, but they are likely to be biased, particularly because of attribution problems—mismatching research benefits with costs. The importance of attribution biases is illustrated here with new evidence for Brazil. During 1981–2003, varietal improvements in upland rice, edible beans, and soybeans yielded benefits of $14.8 billion in present value (1999 prices) terms. Attributing all of the benefits to Embrapa, a public research corporation accounting for more than half of Brazil's agricultural R&D spending, the benefit-cost ratio would be 78:1. Under alternative attribution rules, the ratio drops to 16:1.     

IS PUBLICLY FUNDED AGRICULTURAL RESEARCH EXCESSIVE?

Public sector agricultural research expenditure in the UK has been cut drastically over the last few years. Estimates of the rate of return to UK agricultural R and D by Wise and Harvey suggest that such cuts may well be economically justified, since returns appear to be low or even negative. This paper shows that if the accepted economic methodology is properly applied to the UK situation, the estimated rate of return may be as high as 70 per cent.     

我国农业对外投资研究现状及展望

目的 文章梳理了“一带一路”实施中我国农业对外投资的相关研究,总结了研究成果,找出了研究不足并明确了下一步的研究方向。方法 该文重点对“一带一路”实施中我国农业对外投资的研究现状和特征、挑战和风险、作用和效应、对策和建议等问题进行了综述。结果 （1）已有的研究大多从投资产业、区位选择和投资决策等角度对我国农业对外投资进行研究,但对“一带一路”区域整体性,特别对其北线、中线、南线、中心线等分区域农业投资的对比和分析研究较少;（2）已有的研究较多涉及对我国与东道国的GDP、农业产业结构、就业、农产品贸易、技术溢出、区域农业经济及经济发展等社会与经济指标的影响,但从微观角度对我国在外投资企业的研究较少,尤其缺乏相关的案例分析和研究;（3）已有的研究从贸易效应、技术进步效应、就业效应等角度分析了我国农业对外投资的经济效应,但相应的系统效果模型研究较少。结论 （1）该文提出应对中国与“一带一路”沿线国家农业投资进行整体性研究,并分析和比较“一带一路”北线、中线、南线、中心线的投资特点;（2）应以我国在境外设立的农业企业的一手数据为依托,通过微观角度总结我国农业对外投资的现状和特点,从机遇和挑战两个方面分析当前我国农业对外投资的形势,并在此基础上提出推进我国农业对外投资的相关建议;（3）应建立系统性的利用模型来评价我国农业对外投资的经济效应、社会效应和生态效应,总结当前农业投资的效果,归纳目前存在的问题,并从宏观上提出我国农业对外投资研究的对策建议。     

Quantifying the Impact of Scientific Research on Agriculture

With the growing importance of science and innovation for farming, the scope for summary monetary estimates of the impact of agricultural research on productivity suggests internal rates of return of between 7 and 15 per cent, and time lags in maximum impact of around nine years. However, the extent to which the transmission process can be regarded as a ‘black box’ for econometric purposes is considered increasingly inappropriate, since the intermediate steps between research and the impacts of resulting technology adoption are increasingly complex and involve growing numbers of actors, actions and a wider set of policy objectives. Significant difficulties are encountered in quantifying research impacts, including gaps in data for dependent and explanatory variables. New features of the agricultural sector also need to be accounted for, which relate to the role of knowledge engineering, globalisation and the establishment of new impact pathways which are affecting the speed of transmission of innovations. Public support for agricultural research funding is generally justified but returns are not sufficiently high, thus requiring careful reflection on priorities for research investment. Combined use of qualitative and quantitative evaluation approaches can be complementary and more effective than relying on either alone.     

An Economic Evaluation of Public Wheat Research and Extension Expenditures in Canada*

The widespread commitment of public funds to agricultural research is being questioned by administrators in governments and by the Canadian public. Questions relating to the level of public expenditure on agricultural research, the efficiency with which the resources are being allocated, and the manner in which the benefits are distributed among members of society art being asked. This study addresses these and related questions as they pertain to publicly funded wheat research activities conducted over the period 1946 to 1979- Two research scenarios were examined - one dealing with the development of new varieties of wheat and the other dealing with all research applicable to the production of wheat. The results revealed that society has indeed benefitted substantially from public investment in wheat research. The level of social benefits averaged $49 and $143 million (measured in 1971 dollars) annually for the wheat breeding and all-wheat research scenarios, respectively. The average annual internal rates of return earned from these public investments ranged between 30 and 39 percent. Furthermore, some evidence was presented that suggests society may, in fact, be underin-vesting in agricultural research in the aggregate. Finally, analyses of the distribution of the benefits showed that both producers and consumers are major beneficiaries.     

Research and productivity in Thai agriculture

This paper examines the impact that publicly funded agricultural research has on productivity in crop production within Thailand. It tests empirically the two hypotheses that, first, publicly funded research and development (R&D) in crop production is a significant determinant of total factor productivity (TFP) in the crop sector and, second, that its social rate of return is high. The statistical analysis applies error correction methods to national level time series data for Thailand, covering the period 1970–2006. Emphasis is given to public research in crop production, where most publicly funded agricultural R&D has occurred. The role of international research spillovers and other possible determinants of TFP are also taken into account. The results demonstrate that public investment in research has a positive and significant impact on TFP. International research spillovers have also contributed to TFP. The results support the finding of earlier studies that returns on public research investment have been high. This result holds even after controlling for possible sources of upward biases present in most such studies, due to the omission of alternative determinants of measured TFP. The findings raise a concern over declining public expenditure on crop research, in Thailand and many other developing countries.     

Do Formula or Competitive Grant Funds Have Greater Impacts on State Agricultural Productivity?

This article examines the impact of public agricultural research and extension on agricultural total factor productivity at the state level. The objective is to establish whether federal formula or competitive grant funding of agricultural research has a greater impact on state agricultural productivity. A pooled cross-section time-series model of agricultural productivity is fitted to annual data for forty-eight contiguous states over 1970–1999. Our results show that public agricultural research and agricultural extension have statistically significant positive impacts on state agricultural productivity. In addition, Hatch formula funding has a larger impact on agricultural productivity than federal competitive grant funding, and a reallocation of Hatch formula funds to competitive grant funding would lower agricultural productivity. This seems unlikely to be a socially optimal policy. Furthermore, from a cost–benefit perspective, our study shows that the social marginal annualized real rate of return to public resources invested in agricultural research is 49–62%, and to public agricultural extension, the rate is even larger.     

RESEARCH PRIORITIES IN AGRICULTURE

Following brief presentation of the post-war pattern of agricultural R and D expenditure and productivity changes, the major theoretical issues associated with the evaluation and assessment of R and D spending are discussed. It is argued that emphasis on ex post evaluations of R and D, particularly through rate of return calculations, is misplaced. The economist's tool-box contains many more instruments than internal rates of return and simplified cost/benefit analyses which are relevant to the difficult decisions of R and D allocation and management. A supply/demand perspective of the R and D system and its interaction with the rest of the social economy is suggested as being more useful in the examination of R and D questions than the traditional view of R and D as a linear progression from pure science through applied research and development to adoption, which is implicit in investment analysis. Some implications of the supply/demand view are identified.     

“一家两制”差别化生产概念理论研讨分析

目的 农业生产源头关乎到农产品安全，当前学界就农产品“一家两制”差别化生产相关研究已产生较大学术影响，影响社会舆论对食品安全的判断。方法 文章以19个村庄的调研为基础，检视“一家两制”概念及其理论预设后发现，农产品“一家两制”的差别化生产并非普遍而只是个别现象，已有研究存在证据不足和社会误读等问题。结果 （1）自留地因素是农产品“一家两制”差别化生产的主要证据，但该文认为自留地作为特殊的历史产物不应被纳入农产品差别化生产研究范畴。（2）农产品有差别的生产方式并不完全是农户有意为之的行为，也有无意之举或农作习惯等因素。（3）多元理性的逻辑模型与当前农业生产现实并不契合，生存理性、经济理性和社会理性均难以有效解释农户农业生产行为。（4）“一家两制”理论存在消极的重建食品安全信任、对农户的道德谴责和加剧消费者不信任的弊端。结论 已有“一家两制”概念及其理论研究存在解释力和契合度不足等问题。食品安全治理需从多元主体出发，而不应单纯将农产品安全问题归因于小农户。