New Econometric Evidence on Agricultural Total Factor Productivity Determinants: Impact of Funding Sources

Abstract

This paper examines the impact of public and private agricultural research and extension on agricultural total factor productivity at the state level. We test the hypothesis that the composition of agricultural experiment station funding—share of funding from impact of federal competitive grants and contracts and from federal formula and state government appropriations---affects the productivity of public agricultural research using data for the 48 contiguous states over 1970-1999.  Our results show not only that sources of funding matter, but that an increase in federal competitive grant funding at the expense of federal formula funding would lower the productivity of public agricultural research. Furthermore, our simulation results show that a few states would most likely gain by a re-allocation of federal formula to grant and contract funding but most would lose.