A NEW PERSPECTIVE ON UNDERINVESTMENT IN AGRICULTURAL R&D

During the past 40 years, the returns to agricultural R&D have been on average in the range of 40-60% (Alston, et al 2000, Evenson 2001). Many agricultural economists see this high average as convincing evidence that there is significant underinvestment in public agricultural R&D (Ruttan 1980, Pinstrup-Andersen 2001). This paper sheds new light on the underinvestment hypothesis by introducing a simple model of the selection of R&D projects and confronting it with the rate-of-return evidence accumulated over the years worldwide. The model assumes that the distribution of all possible R&D projects on an expected rate-of-return (ERR) scale declines asymptotically. Under the neoclassical conditions of full information and profit maximization, R&D project selection starts with the project with the highest ERR and continues until the budget is finished or the last project hits the social cutoff rate, whichever comes first. Hence the underinvestment gap can be defined as the difference between the ERR of the marginal R&D project (the actual cutoff rate) and the social cutoff rate. Only three variables need to be known to estimate the underinvestment gap: the social cutoff rate, the actual cutoff rate, and the slope coefficient. Taking less than full information and economic rationality into account, the paper discusses how the latter two can be derived from a sufficiently large and representative sample of ex-post rates of return on agricultural R&D. Important findings of the model are: · Not the mean but the mode of the ex-post rate-of-return distribution is the relevant variable for assessing underinvestment in agricultural R&D. · Under the assumption of full information and profit maximization, developed countries could have invested about 40% more in public agricultural R&D and developing countries about 137% more. In terms of agricultural R&D intensity (i.e., R&D expenditures as a percentage of AgGDP), developed countries could have invested 2.8% rather than 2.0%, and developing countries 1.0% rather than 0.4% in 1981-85. · Low investment in public agricultural R&D in developing countries is caused foremost by a relatively smaller portfolio of profitable R&D projects to choose from. Underinvestment certainly plays a role (the gap is bigger for developing countries), but it explains only a small part of the difference in agricultural R&D intensity between developed and developing countries. · While efforts to reduce the underinvestment gap should continue (e.g., better priority setting and mobilization of political support), more emphasis should be placed on designing policies that help to shift (the portfolio of) R&D projects higher up on the ERR scale, even at the risk of increasing the underinvestment gap. Key words: agricultural R&D, underinvestment, rate of return, research intensitiesagricultural R&D, underinvestment, rate of return, research intensities, Research and Development/Tech Change/Emerging Technologies,

INTERNATIONAL AGRICULTURAL PRODUCTIVITY PATTERNS

In this paper we present measures of land and labor productivity for a group of 98 developed and developing countries using an entirely new data set with annual observations spanning the past three decades. The substantial cross-country and intertemporal variation in productivity in our sample is linked to both natural and economic factors. We extend previous work by dealing with multiple sources of measurement error in conventional agricultural inputs when accounting for observed differences in productivity. In addition to the mix of conventional inputs in agriculture, we find that indicators of quality change in these inputs and the amount of publicly provided infrastructure are significant in explaining cross-sectional differences in productivity patterns.Productivity Analysis,

The changing organizational basis of African agricultural research:

National agricultural research systems in Africa increased markedly in size throughout the past three decades, but from an especially small base. In 1961, public systems in 33 of 48 African countries employed fewer than 25 full-time equivalent (fte) researchers, by 1991 there were only 8 such systems (and 23 countries employed more than 100 fte researchers, compared with only 4 countries in 1961). Despite this overall growth, and the efforts that began in the late 1980s to consolidate the conduct of agricultural research, most African agencies are still very small and fragmented by international standards, making it difficult to realize the scale and scope economies that seem increasingly evident in agricultural R&D conducted elsewhere. This study reports a range of institutional indicators for 341 agricultural research agencies located in 39 African countries. In 1991, 236 agencies (nearly 70 percent of our sample total) employed less than 20 fte researchers. Most public research in Africa is still done by government agencies; they employed 87 percent of the total number of researchers in 1991. University research has grown the most rapidly, but still accounted for only 10 percent of the total number of African researchers in 1991. Partly in response to the small, fragmented, and comparatively isolated structure of agricultural R&D agencies, but partly from local political and, especially, donor pressure too, there has been a proliferation of research networks in recent years. We identified 86 networks, of which 72 involved Africans linked to Africans, a rather parochial strategy in an increasingly interdependent world. Regional approaches to the conduct and funding of agricultural R&D have been revived in more recent years, a feature of much of the regions's research in earlier, colonial times, as we describe here. However, the political and economic realities of today bear little relationship to those of colonial times, and it remains unclear how these regional approaches will prosper and effect meaningful research given the organizational uncertainties that still abound.Research Economic aspects., Research institutes., Africa., Agriculture Research.,

Investments in African agricultural research:

Over the past three decades the development of agricultural research staff in sub-Saharan Africa has been impressive. Developments in agricultural research expenditures were less positive. Many of the developments of the past decade in personnel, expenditures, and sources of support for public-sector R&D in Africa are not sustainable. The rapid buildup of research staff is not paralleled by an equal growth in financial resources. Spending per scientist has continuously declined during the past 30 years, but most dramatically during the 1980s. Resources are spread increasingly thin over a growing group of researchers, which has negative effects on the efficiency and effectiveness of agricultural research.Agriculture Research., Research Economic aspects Africa, Sub-Saharan.,

Cost aspects of African agricultural research:

Spending per scientist declined precipitously within African agricultural R&D agencies over the past several decades. In 1991, average cost per researcher across 147 R&D agencies was $119,300 in 1985 international dollars — or US$59,500 when measured in United States rather than international dollars — 34 percent below the corresponding 1961 figure. This trend reflects the rapid growth in numbers of scientific staff compared with the slow growth in funds to support them. Comparatively low, and often shrinking, real salaries per scientist are a factor too. African scientists were paid an average of US$5,000 in 1991 (or roughly US$7,500 with fringe benefits included), while comparable average salaries for academic staff working in large public universities in the United States were $58,889 (or$72,667 with fringe benefits included. The new, agency-level data reported in this paper reveal significant variation in the costs per scientist not apparent from the country averages. There were 67 agencies (46 percent) that spent less than $100,000 per scientist per annum. Simple econometric procedures were applied to a sub-sample of 107 agencies in 21 countries to investigate reasons for the large variation in costs per scientist. The intensity of support staff per scientist and the intensity with which expatriate researchers are used are important sources of variation. Larger stations lowered the costs and having more stations raised costs, but not significantly so. An agency's organizational type had a significant influence on its costs. Semipublic agencies typically spent considerably more per scientist than government agencies with 1991 figures of$207,700 for the former, compared with around $104,600 for the latter (in 1985 international dollars). GDP per capita and various other unspecified, country-specific effects also accounted for much of the observed variation in costs per scientist.Research institutes., Research Economic aspects.,

REASSESSING PRODUCTIVITY GROWTH IN AFRICAN AGRICULTURE

This paper uses a new panel data set to examine sources of growth in African agriculture. While conventional inputs continue to be the main source of labor productivity growth in Africa, land and labor quality differentials are also significant in explaining observed cross-country productivity patterns.Productivity Analysis,

Основные положения формирования нового единого сельскохозяйственного налога

Обосновывается введение единого сельскохозяйственного налога как постоянной ставки от стоимости валового дохода предприятий.Обгрунтовується введене єдиного сільськогосподарського податку як постійної ставки до вартості валового доходу підприємств.Introduction of the united agricultural tax is grounded as a permanent size to the cost of gross profit of enterprises

Unlocking Africa’s agricultural potential

The preceding chapters of this volume have covered the spectrum of challenges facing Africa south of the Sahara (SSA) in its efforts to develop an effective and efficient agricultural research and development (R&D) system at national, subregional, and regional levels. This chapter endeavors to synthesize the key messages of the individual chapters in order to present an overview of the actions required to unlock the inherent potential of agricultural R&D in the quest for faster growth and more broadly shared development outcomes. The discussion begins with a summary of why resolving the issue of underinvestment in agricultural R&D is fundamental to advancing the region’s technical progress and, hence, raising agricultural productivity. Next, the case is made for the essential need to develop rural innovation capacity to motivate the adoption of new technologies by farmers and increase farm productivity. Finally, the chapter presents the key strategies needed to address current limitations and inefficiencies in agricultural R&D financing, human resources, organization and management, and systems-level structuring.PRIFPRI1; CRP2; ASTIEPTD; WCAO; PIMCGIAR Research Program on Policies, Institutions, and Markets (PIM

A NEW PERSPECTIVE ON UNDERINVESTMENT IN AGRICULTURAL R&D

During the past 40 years, the returns to agricultural R&D have been on average in the range of 40-60% (Alston, et al 2000, Evenson 2001). Many agricultural economists see this high average as convincing evidence that there is significant underinvestment in public agricultural R&D (Ruttan 1980, Pinstrup-Andersen 2001). This paper sheds new light on the underinvestment hypothesis by introducing a simple model of the selection of R&D projects and confronting it with the rate-of-return evidence accumulated over the years worldwide. The model assumes that the distribution of all possible R&D projects on an expected rate-of-return (ERR) scale declines asymptotically. Under the neoclassical conditions of full information and profit maximization, R&D project selection starts with the project with the highest ERR and continues until the budget is finished or the last project hits the social cutoff rate, whichever comes first. Hence the underinvestment gap can be defined as the difference between the ERR of the marginal R&D project (the actual cutoff rate) and the social cutoff rate. Only three variables need to be known to estimate the underinvestment gap: the social cutoff rate, the actual cutoff rate, and the slope coefficient. Taking less than full information and economic rationality into account, the paper discusses how the latter two can be derived from a sufficiently large and representative sample of ex-post rates of return on agricultural R&D. Important findings of the model are: · Not the mean but the mode of the ex-post rate-of-return distribution is the relevant variable for assessing underinvestment in agricultural R&D. · Under the assumption of full information and profit maximization, developed countries could have invested about 40% more in public agricultural R&D and developing countries about 137% more. In terms of agricultural R&D intensity (i.e., R&D expenditures as a percentage of AgGDP), developed countries could have invested 2.8% rather than 2.0%, and developing countries 1.0% rather than 0.4% in 1981-85. · Low investment in public agricultural R&D in developing countries is caused foremost by a relatively smaller portfolio of profitable R&D projects to choose from. Underinvestment certainly plays a role (the gap is bigger for developing countries), but it explains only a small part of the difference in agricultural R&D intensity between developed and developing countries. · While efforts to reduce the underinvestment gap should continue (e.g., better priority setting and mobilization of political support), more emphasis should be placed on designing policies that help to shift (the portfolio of) R&D projects higher up on the ERR scale, even at the risk of increasing the underinvestment gap. Key words: agricultural R&D, underinvestment, rate of return, research intensitie