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Public R&D, Private R&D, and U.S. Agricultural Productivity Growth: Dynamics and Long-Run Relationships

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The increasing importance of private industry in agriculture research has important implications for public science policy and future productivity growth in U.S. agriculture. This study finds econometric evidence of complementarity between public and private agricultural research investments, with both sectors responsive to what the other sector is doing (or not doing). Increased spending on public fundamental or applied crop research appears to stimulate an increase in private research on crops, possibly because of new technologicalopportunities for commercialization opened up by public research. At the same time, public crop research appears to decline following an exogenous increase in private crop research, possibly because the public sector withdraws from areas it sees private companies pursuing. Within the public sector, there appear to be trade-offs between different types of research (an increase in one leads to a decline in another), which could be explained by binding budget constraints faced by public research institutions. These dynamic relationships are most evident in the crop sector; public and private livestock research seems to be largely exogenous of each other. Other results from the study confirm that research affects agricultural productivity only over the long term. Changes in either public or private research expenditure have no significant impact on agricultural TFP growth, but research stocks (accumulation of several years of research expenditures) do. However, due to the high collinearity between public and private agricultural research stocks (even with 40 years of time series data), it remains difficult to estimate the respective impacts of public and private research on productivity. The estimates of research elasticities are sensitive to the model structure and assumptions about the lag structure used to construct research stocks of knowledge capital. Future studies will need to address this multicollinearity issue in order to untangle the separate productivity impacts of public and private R&D.
Sun Ling Wang , Paul W. Heisey , Wallace E. Huffman , Keith O. Fuglie
agricultural industry , agricultural research , business enterprises , capital , commercialization , crops , elasticities , issues and policy , livestock , private research , public research , public sector , research and development , research institutions , research support , time series analysis , United States
American journal of agricultural economics 2013 10 v.95 no.5
Journal Articles, USDA Authors, Peer-Reviewed
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