There is widespread professional consensus that agricultural research and development (R&D) realizes high economic returns, though there are concerns as to whether the returns have been declining over the past few decades and are unevenly distributed among different regions in the world. This study examines both the time trend (i.e., increasing or decreasing) and regional developmental differences in the reported returns to agricultural R&D. Using a newly updated and expanded global database of estimated returns to agricultural R&D and a robust statistical methodology, we find that after accounting for methodological changes and other study attributes that have varied over time, the contemporary returns to agricultural R&D investments are as high as ever. We also conduct a Oaxaca decomposition to assess the relative importance of differences among countries in study attributes (e.g., what research was evaluated, by whom, and how) versus differences in how these attributes relate to the IRR (e.g., model parameter estimates). We find that the regional differences in study attributes tend to result in higher IRR estimates in developed countries, whereas developing versus developed country differences in the marginal effects of the attributes on the estimated IRRs tend to result in higher estimates in developing countries.
Bibliographical noteFunding Information:
All the authors are affiliated with the University of Minnesota’s International Science and Technology Practice and Policy (InSTePP) Center. They thank Connie Chan-Kang, Michelle Hallaway, Louise Letnes and Robert Andrade for their excellent research assistance and comments we received from Julian Alston on a prior version of this paper. This paper was prepared with support from the CGIAR’s Standing Panel on Impact Assessment (SPIA), with additional support from the University of Minnesota, Minnesota Agricultural Experiment Station (MIN-14-061 and MIN-14-134) and the Bill and Melinda Gates Foundation.
- Benefit-cost ratio
- Internal rate of return
- Research and development