Essays on agricultural research investment

This dissertation addresses three questions regarding investments in agricultural research and development (R&D): why, how much, and why not more? The economics literature sees profit as the principal incentive to investing in agricultural R&D. However, this profit motive is constrained by many factors, which makes it quite complicated to detect a direct link between R&D investment and impact. Conceptually, this link could be captured by an R&D opportunity curve , which links the investment in a portfolio of R&D projects with (expected) rates of return to individual R&D projects.While such a link between R&D investment and impact is usually assumed to be implicit, this dissertation attempts to make this link explicit and estimate the shape and position of the agricultural R&D opportunity curve for different sets of countries (developed versus developing) and for different time periods (early 1960s versus early 1980s). This is done by bringing together information on investment levels in agricultural R&D (the how much question) with information obtained from a large number of different studies on rates of return to agricultural R&D.The question of "How much is invested in agricultural R&D?" is addressed in a series of four chapters that have been published previously as articles. They show that in both developed and developing countries, the growth in investment in public agricultural R&D has slowed down steadily during the past 30 years. Nevertheless, between 1961 and 1991 public agricultural research investments in developed countries increased in real terms (i.e., net of inflation) by a factor of 2.7 and in developing countries, by a factor of 5.3. Despite this growth, however, there has not been a notable decline in the average rate of return to investments in agricultural R&D. This finding can only be reconciled by assuming that the R&D opportunity curve is not constant but shifts (and in this case positively) through time.The estimated shape and position of the R&D opportunity curves provides a good starting point for assessing the widely shared perception that there is underinvestment in agricultural R&D. An important finding of this dissertation is that in relative terms, developing countries not only have a considerably more limited portfolio of profitable agricultural R&D projects to choose from than developed countries, but their capacity to select, finance, and implement those opportunities is also substantially weaker. Hence, underinvestment in agricultural R&D tends to be more critical in developing than in developed countries.