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The Economic Returns to Public Agricultural Research in Uruguay

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  • Bervejillo, Jose E.
  • Alston, Julian M.
  • Tumber, Kabir P.

Abstract

We use newly constructed data to model and measure agricultural productivity growth and the returns to public agricultural research conducted in Uruguay over the period 1961–2010. We pay attention specifically to the role of levy-based funding under INIA, which was established in 1990. Our results indicate that the creation of INIA was associated with a revitalization of funding for agricultural R&D in Uruguay, which spurred sustained growth in agricultural productivity during the past two decades when productivity growth was stagnating in many other countries. The econometric results were somewhat sensitive to specification choices. The preferred model includes two other variables with common trends, a time-trend variable and a proxy for private research impacts, as well as a variable representing the stock of public agricultural knowledge that entailed a lag distribution with a peak impact at year 24 of the 25- year lag. It implies a marginal benefit-cost ratio of 48.2, using a real discount rate of 5 percent per annum and a modified internal rate of return of 24% per annum. The benefit-cost ratio varied significantly across models with different lag structures or that omitted the trend or the private research variable, but across the same models the modified internal rate of return was very stable, ranging from 23% per annum to 27% per annum. These results suggest that the revitalized investment in research spending under INIA has been very profitable for Uruguay, and that a greater rate of investment would have been justified.

Suggested Citation

  • Bervejillo, Jose E. & Alston, Julian M. & Tumber, Kabir P., 2011. "The Economic Returns to Public Agricultural Research in Uruguay," Working Papers 162518, Robert Mondavi Institute Center for Wine Economics.
    • Handle: RePEc:ags:mondwp:162518
    DOI: 10.22004/ag.econ.162518
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    References listed on IDEAS

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    1. Julian M. Alston & Matthew A. Andersen & Jennifer S. James & Philip G. Pardey, 2011. "The Economic Returns to U.S. Public Agricultural Research," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(5), pages 1257-1277.
    2. Alston, Julian M. & Wyatt, T. J. & Pardey, Philip G. & Marra, Michele C. & Chan-Kang, Connie, 2000. "A meta-analysis of rates of return to agricultural R & D: ex pede Herculem?," Research reports 113, International Food Policy Research Institute (IFPRI).
    3. Alston, Julian M. & Beddow, Jason M. & Pardey, Philip G., 2009. "Mendel versus Malthus: Research, Productivity and Food Prices in the Long Run," Staff Papers 53400, University of Minnesota, Department of Applied Economics.
    4. Alston, Julian M. & Pardey, Philip G., 2001. "Attribution and other problems in assessing the returns to agricultural R&D," Agricultural Economics, Blackwell, vol. 25(2-3), pages 141-152, September.
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    Cited by:

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    2. Sabasi, Darlington & Shumway, C. Richard, 2014. "Technical Change, Efficiency, and Total Factor Productivity in U.S. Agriculture," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170225, Agricultural and Applied Economics Association.
    3. Rao, Xudong & Hurley, Terrance M. & Pardey, Philip G., 2019. "Are agricultural R&D returns declining and development dependent?," World Development, Elsevier, vol. 122(C), pages 27-37.
    4. Stéphane Lemarié & Valérie Orozco & Jean-Pierre Butault & Antonio Musolesi & Michel Simioni & Bertrand Schmitt, 2020. "Assessing the long-term impact of agricultural research on productivity: evidence from France," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(4), pages 1559-1586.
    5. Andersen, Matthew A., 2015. "Public investment in U.S. agricultural R&D and the economic benefits," Food Policy, Elsevier, vol. 51(C), pages 38-43.
    6. Khan, Farid & Salim, Ruhul, 2015. "The Public R&D and Productivity Growth in Australian Broadacre Agriculture: A Cointegration and Causality Approach," 2015 Conference (59th), February 10-13, 2015, Rotorua, New Zealand 204432, Australian Agricultural and Resource Economics Society.
    7. Kamanda, Josey & Birner, Regina & Bantilan, Cynthia, 2017. "The “efficient boundaries” of international agricultural research: A conceptual framework with empirical illustrations," Agricultural Systems, Elsevier, vol. 150(C), pages 78-85.
    8. Galushko, Viktoriya & Gray, Richard, 2013. "Privatization of Crop Breeding in the UK: Lessons for Other Countries," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158859, Agricultural Economics Society.
    9. Nin-Pratt, Alejandro, 2016. "Comparing apples to apples: A new indicator of research and development investment intensity in agriculture:," IFPRI discussion papers 1559, International Food Policy Research Institute (IFPRI).
    10. Baldos, Uris Lantz C., 2022. "Investing in Public R&D for a Competitive and Sustainable US agriculture," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322242, Agricultural and Applied Economics Association.
    11. Andersen, Matthew A., 2019. "Knowledge productivity and the returns to agricultural research: a review," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(2), April.
    12. Alston, Julian M. & Pardey, Philip G. & Rao, Xudong, 2020. "The Payoff to Investing in CGIAR Research," Miscellaneous Publications 337029, University of Minnesota, Department of Applied Economics.
    13. Matthew A. Andersen, 2018. "Age-Efficiency and Replacement Requirements for Measures of Capital Services," Review of Economics & Finance, Better Advances Press, Canada, vol. 13, pages 55-61, August.
    14. Bervejillo, Jose E. & Alston, Julian M. & Tumber, Kabir P., 2012. "The benefits from public agricultural research in Uruguay," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(4), pages 1-23, December.

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