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Do Formula or Competitive Grant Funds Have Greater Impacts on State Agricultural Productivity?

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  • Wallace E. Huffman
  • Robert E. Evenson
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    Abstract

    This article examines the impact of public agricultural research and extension on agricultural total factor productivity at the state level. The objective is to establish whether federal formula or competitive grant funding of agricultural research has a greater impact on state agricultural productivity. A pooled cross-section time-series model of agricultural productivity is fitted to annual data for forty-eight contiguous states over 1970–1999. Our results show that public agricultural research and agricultural extension have statistically significant positive impacts on state agricultural productivity. In addition, Hatch formula funding has a larger impact on agricultural productivity than federal competitive grant funding, and a reallocation of Hatch formula funds to competitive grant funding would lower agricultural productivity. This seems unlikely to be a socially optimal policy. Furthermore, from a cost-benefit perspective, our study shows that the social marginal annualized real rate of return to public resources invested in agricultural research is 49–62%, and to public agricultural extension, the rate is even larger. Copyright 2006, Oxford University Press.

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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2006.00898.x
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    Bibliographic Info

    Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

    Volume (Year): 88 (2006)
    Issue (Month): 4 ()
    Pages: 783-798

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    Handle: RePEc:oup:ajagec:v:88:y:2006:i:4:p:783-798

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    Cited by:
    1. Xavier Villavicencio & Bruce McCarl & Ximing Wu & Wallace Huffman, 2013. "Climate change influences on agricultural research productivity," Climatic Change, Springer, vol. 119(3), pages 815-824, August.
    2. Huffman, Wallace, 2009. "Investing in People for the 21st Century," Staff General Research Papers 13127, Iowa State University, Department of Economics.
    3. John C. Beghin & Helen H. Jensen, 2008. "Farm Policies and Added Sugars in US Diets," Center for Agricultural and Rural Development (CARD) Publications 08-wp462, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    4. Plastina, Alejandro S. & Fulginiti, Lilyan E., 2009. "Rates of Return to Public Agricultural Research in 48 U.S. States," 2009 Conference, August 16-22, 2009, Beijing, China 51709, International Association of Agricultural Economists.
    5. Wright, Brian D., 2012. "Grand missions of agricultural innovation," Research Policy, Elsevier, vol. 41(10), pages 1716-1728.
    6. Ghazalian, Pascal L. & Furtan, William Hartley, 2007. "The Effect of Innovation on Agricultural and Agri-food Exports in OECD Countries," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 32(03), December.
    7. Jin, Yu & Huffman, Wallace E., 2013. "Reduced U.S. Funding of Public Agricultural Research and Extension Risks Lowering Future Agricultural Productivity Growth Prospects," Staff General Research Papers 36796, Iowa State University, Department of Economics.
    8. Alston, Julian M. & Pardey, Philip G. & Ruttan, Vernon W., 2008. "Research Lags Revisited: Concepts and Evidence from U.S. Agriculture," Staff Papers 50091, University of Minnesota, Department of Applied Economics.
    9. Akbar, Muhammad & Jamil, Faisal, 2012. "Monetary and fiscal policies' effect on agricultural growth: GMM estimation and simulation analysis," Economic Modelling, Elsevier, vol. 29(5), pages 1909-1920.
    10. Huffman, Wallace, 2009. "Technology and Innovation in World Agriculture: Prospects for 2010-2019," Staff General Research Papers 13060, Iowa State University, Department of Economics.
    11. Jesse Tack & Rulon Pope & Jeffrey LaFrance & Ricardo Cavazos, 2012. "Flexible Specification and Robust Estimation of Input Demand Systems," Monash Economics Working Papers 48-12, Monash University, Department of Economics.
    12. Huffman, Wallace, 2007. "Demand for Farm Labor in the Coastal Fruit and Salad Bowl States Relative to Midland States: Four Decades of Experience," Staff General Research Papers 12827, Iowa State University, Department of Economics.
    13. McCarl, Bruce A. & Villavicencio, Xavier & Wu, Ximing, 2009. "The Effect of Climate Change over Agricultural Factor Productivity: Some Econometric Considerations," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49452, Agricultural and Applied Economics Association.
    14. Binenbaum, Eran & Mullen, John D. & Wang, Chang Tao, 2008. "Has the Return on Australian Public Investment in Agricultural Research Changed?," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6016, Australian Agricultural and Resource Economics Society.
    15. Poppe, Krijn J., 2008. "Economic assessment of Dutch agricultural research," Report Series 43071, Agricultural Economics Research Institute.
    16. Benin, Samuel & Mogues, Tewodaj & Cudjoe, Godsway & Randriamamonjy, Josee, 2009. "Public expenditures and agricultural productivity growth in Ghana," 2009 Conference, August 16-22, 2009, Beijing, China 51634, International Association of Agricultural Economists.
    17. Andersen, Matthew A. & Alston, Julian M. & Pardey, Philip G., 2009. "Capital Service Flows: Concepts and Comparisons of Alternative Measures in U.S. Agriculture," Staff Papers 50098, University of Minnesota, Department of Applied Economics.
    18. Sheng, Yu & Gray, Emily M. & Mullen, John D., 2011. "Public investment in R&D and extension and productivity in Australian broadacre agriculture," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100712, Australian Agricultural and Resource Economics Society.

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