The Evolving Structure of Chinese R&D Funding and its Implications for the Productivity of Agricultural Biotechnology Research

China’s research and development (R&D) policy has changed considerably over recent decades, and great changes occurred in 2006 when the main programme objective of China’s R&D changed from the 863 Programme and 973 Programme to the National Science and Technology Major Project. One topic that has drawn extensive attention is whether the investment reform improved R&D productivity in China. Using a unique panel dataset from 160 universities, this paper examines the effect of the investment reform on productivity improvement in China’s agricultural biotechnology sector. We use a panel count data model with a dynamic feedback mechanism to model the knowledge production process. Strong evidence indicates that the investment reform greatly contributes to knowledge output production in China’s agricultural biotechnology sector. We also find that the input quality is more important than the absolute quantity; human research capacity exhibits the greatest contribution to the output of patents; past knowledge accumulation helps produce more patents; and entry barriers to patent production exist in China’s agricultural biotechnology sector. Moreover, the patent explosion in China may have been largely caused by improvements in the human capital input quality.     

Productivity growth and the returns from public investment in R&D in Australian broadacre agriculture

Investment in R&D has long been regarded as an important source of productivity growth in Australian agriculture. Perhaps because research lags are long, current investment in R&D is monitored closely. Investment in R&D has been flat while productivity growth has remained strong, relative both to other sectors of the Australian economy and to the agricultural sectors of other countries. Such productivity growth, at a time when the decline in terms of trade facing Australian farmers has slowed, may have enhanced the competitiveness of Australian agriculture. The econometric results presented here suggest no evidence of a decline in the returns from research from the 15 to 40 per cent per annum range estimated by Mullen and Cox. In fact the marginal impact of research increases with research over the range of investment levels experienced from 1953 to 2000, a finding which lends support to the view that there is underinvestment in agricultural research. These results were obtained from econometric models which maintain strong assumptions about how investments in research and extension translate into changes in TFP. Hence some caution in interpreting the results is warranted.     

Exploring the impact of R&D and climate change on agricultural productivity growth: the case of Western Australia*

This article empirically examines the impact of R&D and climate change on the Western Australian Agricultural sector using standard time series econometrics. Based on historical data for the period of 1977–2005, the empirical results show that both R&D and climate change matter for long‐run productivity growth. The long‐run elasticity of total factor productivity (TFP) with respect to R&D expenditure is 0.497, while that of climate change is 0.506. There is a unidirectional causality running from R&D expenditure to TFP growth in both the short run and long run. Further, the variance decomposition and impulse response function confirm that a significant portion of output and productivity growth beyond the sample period is explained by R&D expenditure. These results justify the increase in R&D investment in the deteriorating climatic condition in the agricultural sector to improve the long‐run prospects of productivity growth.     

The public R&D and productivity growth in Australia's broadacre agriculture: is there a link?

This paper investigates the dynamic relationships between research and development (R&D) expenditure and productivity growth in Australian broadacre agriculture using aggregate time series data for the period 1953 to 2009. The results show a cointegrating relationship between R&D and productivity growth and a unidirectional causality from R&D to TFP (total factor productivity) growth in Australian broadacre agriculture. Using the dynamic properties of the model, data from beyond the sample period are analysed by employing the variance decomposition and the impulse response function. The findings reveal that R&D can be readily linked to the variation in productivity growth beyond the sample period. Furthermore, the forecasting results indicate that a significant out‐of‐sample relationship exists between public R&D and productivity in broadacre agriculture.     

Dynamic general equilibrium analysis of improved weed management in Australia's winter cropping systems*

A recent analysis indicated that the direct financial cost of weeds to Australia's winter grain sector was approximately $A1.2bn in 1998–1999. Costs of this magnitude represent a large recurring productivity loss in an agricultural sector that is sufficient to impact significantly on regional economies. Using a multi‐regional dynamic computable general equilibrium model, we simulate the general equilibrium effects of a hypothetical successful campaign to reduce the economic costs of weeds. We assume that an additional $50m of R&D spread over five years is targeted at reducing the additional costs and reduced yields arising from weeds in various broadacre crops. Following this R&D effort, one‐tenth of the losses arising from weeds is temporarily eliminated, with a diminishing benefit in succeeding years. At the national level, there is a welfare increase of $700m in discounted net present value terms. The regions with relatively high concentrations of winter crops experience small temporary macroeconomic gains.     

R&D and Innovation in Food Processing Firms in Transition Countries

We examine the implications of the liberalised economic conditions associated with the economic transformations in the transition countries of Central and Eastern Europe (CEE) and Commonwealth of Independent States (CIS) for R&D and innovation in the food processing sector. We use a dataset derived from the World Bank's Business Environment and Enterprise Performance Surveys (BEEPS) database to examine the relationships between R&D/innovation activities in food processing firms in transition countries and (i) privatisation, (ii) foreign direct investment, (iii) trade activities, (iv) market competition pressure, and (v) economies of scale. The empirical analysis is implemented through: (i) a double‐hurdle model for R&D participation and expenditures, and (ii) a bivariate probit model for product and process innovation. We find that these economic transformations generally promote R&D/innovation activities in the food processing sector. Our results suggest that broadened and deepened economic liberalisation policies would improve the innovation performance of the food processing sector in transition countries, and would enhance competitiveness in domestic and foreign markets. They also indicate that innovation policies may need to be tailored to market and industrial characteristics of different transition regions.     

Exploring the widening food gap: an international perspective

Using data for a long panel of 90 developed and developing countries, this article explores the effects of research and development (R&D) and fixed capital stock on agricultural land productivity over the period 1961–2012. Instruments are used for R&D to deal with feedback effects and measurement errors. The results show very high social returns to investment in R&D and to fixed capital stock, suggesting that increasing investment in these factors are promising ways of arresting the increasing food prices due to increasing demand for animal protein, population growth, desertification, salinization, soil erosion, climate change, and decreasing growth in land productivity.     

The research cost of adapting agriculture to climate change: A global analysis to 2050

Investments in agricultural research and development (R&D) made over the next few decades will likely prove critical in offsetting adverse climate change impacts on the global food system. In this study, we offer cost estimates of public R&D-led adaptation to climate change grounded in an explicit framework relating the flow of annual R&D expenditures to building knowledge capital and thereby raising productivity in agriculture. Our research uses a comprehensive collection of historical public agricultural R&D expenditure and a literature review of elasticity estimates linking knowledge stocks to agricultural productivity growth for key world regions. Given climate-driven crop yield projections generated from extreme combinations of crop and global circulation models, we find that offsetting crop yield losses projected by climate and crop models over 2006–2050 would require increased R&D adaptation investments of between $187 billion and $1,384 billion (in 2005 $PPP) if we invest between 2020 and 2040. This is 16–118% higher than global R&D investment if present spending trends continue. Although these costs are significant, worldwide R&D-led climate adaptation could offer favorable economic returns. Moreover, R&D-led adaptation could deliver gains in food security and environmental sustainability by mitigating food price increases and slowing cropland expansion.     

The Employment and Output Effects of Changing Patterns of Afforestation in Scotland

This paper considers the economy‐wide output and employment effects of the shift in forest expansion away from coniferous plantations towards broadleaf and native species. Four different woodland types are distinguished within a Scottish input‐output table and demand and supply multipliers estimated to show the total effects on the economy of a 100 hectare increase in the land area devoted to each type as well as a switch in land from agriculture. Results suggest that the output and employment effects of new native woodlands and farm woodlands are greater than those generated by planting additional coniferous woodlands of equivalent size. In addition, an increase in the area of these policy‐driven woodland types is likely to have positive effects, even when the expansion impinges onto agricultural land of average productivity. It is thus argued that the traditional economic objectives of forestry policy have not been compromised in the drive towards multi‐benefit woodlands.     

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.     

Knowledge productivity and the returns to agricultural research: a review

This paper describes the identification, specification, estimation, and evaluation of econometric models of knowledge productivity and the returns‐to‐research. General issues related to these models are discussed and placed in context of the literature. The path from R&D investment to economic benefit is complex, convoluted, generally unknown and possibly misrepresented. The complexity arises from the intricate spatial spillover relationships and the very long time periods involved, which complicate any econometric analysis. The relevant R&D investment data are typically unavailable, incomplete and poorly measured (or approximated). The appropriate calculation of the financial benefit is not entirely clear. Some parsimonious suggestions for future research are presented.     

提升农业可持续生产力的瓶颈问题与对策

[目的]解决长期以来我国农业生产力的提升主要围绕产量展开带来的资源问题、环境问题和生态问题,突破农业生产力提升的不可持续性和空间有限的困境,从而有效促进农业可持续发展。[方法]理论分析推导,实践归纳总结,政策引领分析。[结果]农业是与自然关系密切的产业,农业可持续生产力的提升也必须从资源、环境和生态这些方面寻找根本驱动力,紧紧围绕资源节约型、环境友好型、生态保育型"三型"农业展开。[结论]提升农业可持续生产力要突出3个创新:(1)体系创新,即用生物农业和物理农业构建高效生态农业体系,以逐步替代化学农业;(2)产业创新,即以建立在农业废弃物循环经济基础上的静脉产业促进生产农产品的动脉产业,形成高盈利静动脉产业联合体;(3)模式创新,即创建高效生态农业特效模式,为提升农业可持续生产力找到特效路径。     

Public agricultural R&D over the past half century: an emerging new world order

Recent trends in farm productivity and food prices raise concerns about whether the era of global agricultural abundance is over. Agricultural R&D is a crucial determinant of agricultural productivity and production, and therefore food prices and poverty. In this article, we present entirely new evidence on investments in public agricultural R&D worldwide as an indicator of the prospects for agricultural productivity growth over the coming decades. The agricultural R&D world is changing, and in ways that will definitely affect future global patterns of poverty, hunger, and other outcomes. The overall picture is one in which the middle‐income countries are growing in relative importance as producers of agricultural innovations through investments in R&D, and have consequently better prospects as producers of agricultural products.     

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.     

External and Internal R&D,Capital Investment and Business Performance in the Spanish Agri‐Food Industry

We examine the effects of external and internal expenditure on research and development on the business performance of industrial agri‐food enterprises. For this purpose, a data sample from the Encuesta de Estrategias Empresariales en España (Survey of Business Strategies in Spain) was used, which includes information on more than 400 businesses over the period 2000–2008. The econometric analysis uses quantile regressions to address the vast asymmetry of the variables and to identify non‐linear relationships. The results reveal interesting new findings on the impacts of R&D on the agri‐food industry. The most evident, although not the most immediately apparent, relationship concerns the positive effects of external R&D on business performance. Internal R&D was also revealed to be an important way of enhancing the productivity of SMEs. In addition, the modernisation of the production process through investment in capital goods continues to be the main path to improve competitiveness. However, support was found neither for the inverse relationship, that is the most profitable firms are those that spend the most on R&D, nor for complementarity between external and internal R&D. The latter would imply that the bulk of Spanish agri‐food firms have at most the capacity for only one type of R&D.     

Welfare Impacts of Intellectual Property Protection in the Seed Industry

We examine the welfare impact of different intellectual property protection (IPP) regimes in private sector seed research and development (R&D). We take into account the period after expiration of legal IPP, and require simultaneous equilibrium in markets for R&D, seeds, and final product. Optimal IPP is remarkably insensitive to alternative parameterizations, except for R&D productivity. Results suggest that optimal IPP is greater than IPP in the U.S. seed corn market, but lower than the IPP that could be attained with genetic use restriction technologies. Optimal IPP is much higher than IPP achieved under open-pollinated crops or where legal IPP is limited.     

The benefits from public agricultural research in Uruguay

We use newly constructed data to model and measure agricultural productivity growth and the returns to public agricultural research conducted in Uruguay over the period 1961–2010. We pay attention specifically to the role of levy‐based funding under INIA, which was established in 1990. Our results indicate that the creation of INIA was associated with a revitalization of funding for agricultural R&D in Uruguay, which spurred sustained growth in agricultural productivity during the past two decades when productivity growth was stagnating in many other countries. The econometric results were somewhat sensitive to specification choices. The preferred model includes two other variables with common trends, a time‐trend variable and a proxy for private research impacts, as well as a variable representing the stock of public agricultural knowledge that entailed a lag distribution with a peak impact at year 24 of the 25‐year lag. It implies a marginal benefit‐cost ratio of 48.2, using a real discount rate of 5 per cent per annum and a modified internal rate of return of 24 per cent per annum. The benefit‐cost ratio varied significantly across models with different lag structures or that omitted the trend or the private research variable, but across the same models, the modified internal rate of return was very stable, ranging from 23 per cent per annum to 27 per cent per annum. These results suggest that the revitalized investment in research spending under INIA has been very profitable for Uruguay and that a greater rate of investment would have been justified.     

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.     

Integrated economic-hydrologic water modeling at the basin scale: the Maipo river basin

Increasing competition for water across sectors increases the importance of the river basin as the appropriate unit of analysis to address the challenges facing water resources management; and modeling at this scale can provide essential information for policy makers in their resource allocation decisions. This paper introduces an integrated economic‐hydrologic modeling framework that accounts for the interactions between water allocation, farmer input choice, agricultural productivity, non‐agricultural water demand, and resource degradation in order to estimate the social and economic gains from improvement in the allocation and efficiency of water use. The model is applied to the Maipo river basin in Chile. Economic benefits to water use are evaluated for different demand management instruments, including markets in tradable water rights, based on production and benefit functions with respect to water for the agricultural and urban‐industrial sectors.     

Knowledge diffusion and agricultural development

Low agricultural productivity remains the primary source of poverty in the developing regions and yet little is known about the influence on agricultural productivity of domestic and international accumulated R&D knowledge and the channels through which this knowledge is transmitted internationally. Following a large scientific literature, this article argues that R&D and R&D knowledge spillover are ecozone‐specific and, therefore, are transmitted internationally through ecozones, where ecozones are the broadest biogeographic division of the earth's land surface. Using data for a panel of 88 countries, it is shown that international knowledge spillovers are ecozone‐specific and have been an important contributing factor behind the marked widening of the income gap between developed and developing countries since 1983.