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The Economic Returns to U.S. Public Agricultural Research

Author

Listed:
  • Julian M. Alston
  • Matthew A. Andersen
  • Jennifer S. James
  • Philip G. Pardey

Abstract

We use newly constructed state-specific data to explore the implications of common modeling choices for measures of research returns. Our results indicate that state-to-state spillover effects are important, that the research and development lag is longer than many studies have allowed, and that misspecification can give rise to significant biases. Across states, the average of the own-state benefit-cost ratios is 21:1, or 32:1 when the spillover benefits to other states are included. These ratios correspond to real internal rates of return of 9% or 10% per annum, much smaller than those typically reported in the literature, partly because we have corrected for a methodological flaw in computing rates of return. Copyright 2011, Oxford University Press.

Suggested Citation

  • 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.
  • Handle: RePEc:oup:ajagec:v:93:y:2011:i:5:p:1257-1277
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    Cited by:

    1. 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.
    2. Julian M. Alston & Joanna P. MacEwan & Abigail M. Okrent, 2016. "Effects of U.S. Public Agricultural R&D on U.S. Obesity and its Social Costs," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(3), pages 492-520.
    3. Rao, Xudong & Hurley, Terrance M. & Pardey, Philip G., 2012. "Recalibrating the Reported Rates of Return to Food and Agricultural R&D," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124581, Agricultural and Applied Economics Association.
    4. 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 Archive 36796, Iowa State University, Department of Economics.
    5. Esposti, Roberto, 0. "Knowledge, Technology and Innovations for a Bio-based Economy: Lessons from the Past, Challenges for the Future," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), issue 3.
    6. repec:ags:remeag:163039 is not listed on IDEAS
    7. repec:oup:rseval:v:27:y:2018:i:1:p:36-42. is not listed on IDEAS
    8. repec:ags:remeag:163037 is not listed on IDEAS
    9. Viaggi, Davide, 0. "Research and innovation in agriculture: beyond productivity?," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), issue 3.
    10. Rao, Xudong & Hurley, Terrance M. & Pardey, Philip G., 2016. "Are Agricultural R&D Returns Declining and Development Dependent?," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235962, Agricultural and Applied Economics Association.
    11. 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.
    12. Alejandro Nin Pratt, 2016. "Comparing Apples to Apples: A New Indicator of Research and Development Investment Intensity in Agriculture," Working Papers id:11379, eSocialSciences.
    13. Alston, Julian M. & Okrent, Abigail M. & Parks, Joanna, 2013. "Effects of U.S. Public Agricultural R&D on U.S. Obesity and its Social Costs- Revised," Working Papers 162530, Robert Mondavi Institute Center for Wine Economics.
    14. repec:ags:remeag:163038 is not listed on IDEAS
    15. 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.
    16. 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.
    17. Kamanda, Josey & Birner, Regina & Bantilan, Cynthia, 2015. "The "Efficient Boundaries" of International Agricultural Research: A Conceptual Framework with Empirical Illustrations," 2015 Conference, August 9-14, 2015, Milan, Italy 211826, International Association of Agricultural Economists.
    18. 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.
    19. Kamanda, Josey & Birner, Regina & Bantilan, Ma Cynthia S., 2013. "Strategic positioning of international agricultural research centres: Comparative advantage and trade-offs from a transaction cost economics perspective," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152160, Australian Agricultural and Resource Economics Society.
    20. repec:ags:remeag:163036 is not listed on IDEAS
    21. Alston, Julian M. & Pardey, Philip G., 2014. "Agricultural R&D, Food Prices, Poverty and Malnutrition Redux," Staff Papers 162413, University of Minnesota, Department of Applied Economics.
    22. 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), December.
    23. 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.

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