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R&D Spillovers: Evidence from U.S. Food Processing, Farm Machinery and Agriculture

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  • Gopinath, Munisamy
  • Roe, Terry L.

Abstract

This paper focuses on the private and social rates of return to R&D capital in the three vertically linked sectors, primary agriculture, food processing, and farm machinery and equipment. Evidence supporting a divergence between these rates is found for primary agriculture and food processing. Using a cost function approach, the private rates of return to R&D capital ranged from an average of 10.2% per annum for food processing to 22.3% for farm machinery and equipment. In the case of agriculture, the direct return to public R&D averaged 37.3% per annum. The social rates of return to R&D capital in agriculture and food processing are significantly larger than the private rates due to the existence of spillovers. While the divergence between rates is small in the farm machinery and equipment sector, its high direct rate may suggest relatively large intra-sector spillovers. We find that spillovers from public agricultural R&D to food processing exceeds the spillovers from food processing to the other two sectors. Thus, to a degree, public R&D in agriculture mitigates the market's failure in food processing to fully appropriate the returns to their R&D capital.

Suggested Citation

  • Gopinath, Munisamy & Roe, Terry L., 1996. "R&D Spillovers: Evidence from U.S. Food Processing, Farm Machinery and Agriculture," Bulletins 7504, University of Minnesota, Economic Development Center.
  • Handle: RePEc:ags:umedbu:7504
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    File URL: http://purl.umn.edu/7504
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    References listed on IDEAS

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    1. Perloff, Jeffrey M, 1991. "Econometric analysis of imperfect competition and implications for trade research," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt46w1j22d, Department of Agricultural & Resource Economics, UC Berkeley.
    2. Mohtadi, Hamid & Roe, Terry L., 1991. "Political Economy of Endogenous Growth (Revised)," Bulletins 7502, University of Minnesota, Economic Development Center.
    3. repec:bin:bpeajo:v:24:y:1993:i:1993-2m:p:289-343 is not listed on IDEAS
    4. Backus, David K. & Kehoe, Patrick J. & Kehoe, Timothy J., 1992. "In search of scale effects in trade and growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 377-409, December.
    5. Mansfield, Edwin, 1983. "Technological Change and Market Structure: An Empirical Study," American Economic Review, American Economic Association, vol. 73(2), pages 205-209, May.
    6. Bernstein, Jeffrey I & Nadiri, M Ishaq, 1988. "Interindustry R&D Spillovers, Rates of Return, and Production in High-Tech Industries," American Economic Review, American Economic Association, vol. 78(2), pages 429-434, May.
    7. Munisamy Gopinath & Terry L. Roe & Mathew D. Shane, 1996. "Competitiveness of U.S. Food Processing: Benefits from Primary Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 1044-1055.
    8. Bronwyn H. Hall, 1993. "Industrial Research during the 1980s: Did the Rate of Return Fall?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(2 Microec), pages 289-343.
    9. Diao, Xinshen & Elbasha, Elamin H. & Roe, Terry L. & Yeldan, A. Erinc, 1996. "A Dynamic CGE Model: An Application of R&D- Based Endogenous Growth Model Theory," Bulletins 7461, University of Minnesota, Economic Development Center.
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    Cited by:

    1. Heisey, Paul W. & King, John L. & Day-Rubenstein, Kelly A. & Bucks, Dale A. & Welsh, Rick, 2010. "Assessing the Benefits of Public Research Within an Economic Framework: The Case of USDA's Agricultural Research Service," Economic Research Report 94852, United States Department of Agriculture, Economic Research Service.
    2. Venturini, Luciano, 2006. "Vertical competition between manufacturers and retailers and upstream incentives to innovate and differentiate," 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece 10050, European Association of Agricultural Economists.
    3. Roe, Terry L. & Mohtadi, Hamid, 1999. "International Trade And Growth: An Overview From The Perspective Of The New Growth Theory," 1999 Annual meeting, August 8-11, Nashville, TN 21536, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    More about this item

    Keywords

    Research and Development/Tech Change/Emerging Technologies; 013; 032; Q16;

    JEL classification:

    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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