Short and long-run returns to agricultural R&D in South Africa, or will the real rate of return please stand up?
This paper briefly presents the results of a total factor productivity (TFP) study of South African commercial agriculture, for 1947-1997, and illustrates some potential pitfalls in rate of return to research (ROR) calculations. The lag between R&D and TFP is analyzed and found to be only 9 years, with a pronounced negative skew, reflecting the adaptive focus of the South African system. The two-stage approach gives a massive ROR of 170%. The predetermined lag parameters are then used in modeling the knowledge stock, to refine the estimates of the ROR from short- and long-run dual profit functions. In the short run, with the capital inputs treated as fixed, the ROR is a more reasonable 44%. In the long run, with adjustment of the capital stocks, it rises to 113%, which would reflect the fact that new technology is embodied in the capital items. However, the long-run model raises a new problem since capital stock adjustment takes 11 years, 2 years longer than the lag between R&D and TFP. If this is assumed to be the correct lag, the ROR falls to 58%, a best estimate. The paper draws attention to the possible sensitivity of rate of return calculations to assumed lag structure, particularly when the lag between changes in R&D and TFP is skewed. © 2000 Elsevier Science B. V. All rights reserved.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Zyl, J. Van & Vink, N. & Fenyes, T. I., 1987.
"Labour-Related Structural Trends in South African Maize Production,"
Agricultural Economics of Agricultural Economists,
International Association of Agricultural Economists, vol. 1(3), October.
- Van Zyl, J. & Vink, N. & Fenyes, T. I., 1987. "Labour-related structural trends in South African maize production," Agricultural Economics, Blackwell, vol. 1(3), pages 241-258, October.
- Evenson, Robert E. & Landau, Daniel & Ballou, Dale, 1987. "Agricultural Productivity Measures for U.S. States 1950-82," Evaluating Agricultural Research and Productivity, Proceedings of a Workshop, Atlanta, Georgia, January 29-30, 1987, Miscellaneous Publication 52 50019, University of Minnesota, Agricultural Experiment Station.
- Kislev, Yoav & Peterson, Willis, 1982. "Prices, Technology, and Farm Size," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 578-95, June.
- Lau, Lawrence J., 1976. "A characterization of the normalized restricted profit function," Journal of Economic Theory, Elsevier, vol. 12(1), pages 131-163, February.
- Geweke, John F & Meese, Richard, 1981.
"Estimating Regression Models of Finite but Unknown Order,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(1), pages 55-70, February.
- Geweke, John & Meese, Richard, 1981. "Estimating regression models of finite but unknown order," Journal of Econometrics, Elsevier, vol. 16(1), pages 162-162, May.
- Khatri, Yougesh & Thirtle, Colin & Van Zyl, Johan, 1995. "South African Agricultural Competitiveness: A Profit Function Approach to the Effects of Policies and Technology," 1994 Conference, August 22-29, 1994, Harare, Zimbabwe 183442, International Association of Agricultural Economists.
- C. Thirtle & P. Bottomley, 1992. "Total Factor Productivity In Uk Agriculture, 1967-90," Journal of Agricultural Economics, Wiley Blackwell, vol. 43(3), pages 381-400.
- Schmidt, Peter, 1974. "An Argument for the Usefulness of the Gamma Distributed Lag Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(1), pages 246-50, February.
When requesting a correction, please mention this item's handle: RePEc:eee:agecon:v:23:y:2000:i:1:p:1-15. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.