Ag Aid and Tech Breakthroughs: Pull Funding for Smallholder Productivity

With the growth in annual yields for key staple crops falling and global population projected to add another two to three billion mouths to feed by 2050, farming practices, service delivery, and marketing will all need to be improved to meet increased demand sustainably. It’s a tall order, and donors and aid recipients alike are frequently frustrated by the underwhelming results and high transactions costs of much foreign assistance today. “Pull mechanisms” are not a silver bullet, but some donors see them as a tool to address this particular intersection of problems—stimulating innovation, pulling in the private sector, and making aid delivery more effective by paying for outcomes rather than inputs. An earlier paper (Elliott 2010) reviewed the market failures that inhibit socially optimal levels of research and development—in developing countries in general and in developing-country agriculture specifically—and the factors involved in choosing between push and pull mechanisms. The focus here is on factors to be considered when choosing among pull mechanisms and on what the limited experience with pull mechanisms can tell us about the potential utility of these instruments. The experience so far suggests that donors remain more comfortable with traditional ways of funding research and development from the top down and are still cautious about using new mechanisms that provide more space for innovation from the bottom up.