This study presents entirely new econometric evidence on the links between public investments in agricultural R&D and agricultural productivity using state-specific data on U.S. agricultural productivity, and federal and state government investments in agricultural research and extension. Particular attention is paid to the specification of the research lag structure and interstate spillovers and the implications for the estimated returns to research. Using newly constructed sets of panel data, some of which span the twentieth century, the results indicate that the lags linking R&D spending to productivity growth are substantially longer than commonly found or assumed in the prior published work. The spillover effects of R&D among states are also especially important, such that the national social net benefits form a state's agricultural research investments are much greater than the state's own net benefits. Specific results are sensitive to unavoidable model specification choices, but the main findings are consistent across all of the models, indicating that the benefits from past public investments in agricultural research have been worth many times more than the costs, that a significant share of the benefits accrue as spillovers, and that the research lags are very long. The evidence is also indicative of a substantial misallocation of public funds to U.S. agricultural R&D. Clearly the total investment has been too little, and the results also suggest that a reallocation of funding among states might raise the national return to investments in agricultural R&D.
From the reviews:Persistence Pays is a definitive source book on the economics of agricultural R&D in the United States. The topical coverage is impressively comprehensive, ranging from discussion of the historical development of U.S. agriculture and U.S. agricultural research policy, through a quantification of the patterns of production and input use, to econometric models of R&D and productivity and their implications. The treatment of particular themes is careful and instructive. The authors provide new, detailed, state-level data on both agricultural R&D investments and productivity, along with a critical survey and review of relevant measures, methods, and models, before presenting brand-new econometric results. These new results refine and extend past work in the area, reinforcing many of the past findings about the high social returns to agricultural research and the persistent patterns of underinvestment. The book has significant technical content that will be primarily of interest to other economists both in the classroom and in research applications, but it is also readily accessible to research administrators and policy makers, well beyond the United States, who wish to understand the links between public research policy, agriculture, and the economy.--Jock R. Anderson. Emeritus Professor of Agricultural Economics at the University of New England, Armidale, Australia, and Adviser, Agriculture and Rural Development, World Bank, Washington, DC.This is a sophisticated book on a critically important subject. Many people have talked about the importance of public R&D in propelling the growth in American agricultural productivity but there has been scant hard evidence on the issue. Alston, Andersen, James, and Pardey rectify this deficiency with a brilliant book that represents a major contribution to our understanding of technological change--this is the new gold standard in the field. Their achievement is multidimensional--they carefully construct new state-level data series on the quantity and quality of agricultural inputs and outputs, they offer a wealth of information on the institutions and functioning of the public agricultural research system, and they employ well-conceived models and state-of-the-art econometrics to tease out the effects of R&D expenditures on productivity growth. In the process they provide entirely new insights into myriad issues such as the extent of research spillovers, the nature of the lags in R&D investments, and the extent of the policy failures since the 1970s giving rise to a slowdown in farm productivity in the past10--20 years.--Alan L. Olmstead. Distinguished Research Professor, Department of Economics, University of California, Davis and co-author of Creating Abundance: Biological Innovation and American Agricultural Development, Cambridge University Press, 2008This book presents new solid empirical evidence about the past, current and required future role of research and innovations to prepare U.S. agriculture to meet future domestic and international food demand in a sustainable manner. The economic rates of return are high and spillovers across states are large. The authors make a strong and well-supported case for expanding federal funding for agricultural research. Global food demand is likely to double over the next 50 years. Given the long time lag between research investments and productivity gains, documented in this book, and the recent global food crisis, expanded investments are long overdue. Policy-makers, advisors and analysts should pay attention to the findings reported in this book and take appropriate action now to stop the current trend of decreasing rates of productivity growth.--Per Pinstrup-Andersen. H. E. Babcock Professor of Food, Nutrition and Public Policy, J. Thomas Clark Professor of Entrepreneurship, and Professor of Applied Economics at Cornell University; and Professor of Agricultural Economics at Copenhagen University. World Food Prize Laureate, 2001"The main purpose of this book is to provide a better understanding of the pattern of US agricultural productivity growth ! in the USA during the period from 1949 to 2002. ! this book is informative and provides a lot of details on the US agricultural sector for both productivity and research funding issues. This book can be treated as a reference book. ! it is not only for professionals, but could also be informative to policy makers as well as general readers." (Sun Ling Wang, European Review of Agricultural Economics, Vol. 37 (3), September, 2010)
Introduction.- The Changing Structure of U.S. Agriculture.- Agricultural Inputs.- Agriculture Outputs.- Agricultural Productivity Patterns.- Agricultural R&D.- Agricultural R&D and Technology Spillovers.- Models of Research and Productivity.- Econometric Estimation and Results.- Past and Prospective Productivity Patterns and Research Benefits.- Interpretation and Assessment of Benefit-Cost Findings.- Synthesis.
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