private-sector investment in r&d: a review of policy options to promote its growth in...

Private-Sector Investment in R&D: A Reviewof Policy Options to Promote its Growthin Developing-Country Agriculture

Anwar NaseemDepartment of Natural Resource Sciences, McGill University, MacDonaldCampus, 21, 111 Lakeshore, Ste-Anne-de-Bellevue, Quebec H9X 3V9,Canada. E-mail: [email protected]

David J. SpielmanInternational Food Policy Research Institute, PO Box 5689, Addis Ababa,Ethiopia. E-mail: [email protected]

Steven Were OmamoUnited Nations World Food Programme, Via C.G.Viola 68, Parco dei Medici,00148 Rome, Italy. E-mail: [email protected]

ABSTRACT

Technological innovation is vital to enhancing agricultural productivity and reducing povertyin many developing countries. Public investment in research and development has historicallydriven technological change in agriculture; however, recent trends suggest that the privatesector may play a larger role in the future. Although there is optimism about the privatesector’s ability to generate new technologies relevant to developing-country agriculture,current levels of private investment remain low. The authors examine the determinants ofprivate R&D investment in developing-country agriculture, the market, and institutionalconstraints that limit the growth of investment, and incentives that can promote more rapidinvestment growth. [EconLit classification: O300, Q160]. r 2010 Wiley Periodicals, Inc.

1. INTRODUCTION

The role of science and technology in promoting economic growth and welfareimprovement is well established, particularly in the field of agriculture and ruraldevelopment. New technologies can enhance the quantity and quality of agriculturalyields and output, while also improving the sustainable use of natural resources,reducing consumer food prices, connecting rural producers to market opportunities,and stimulating the accumulation of physical and human capital for ruralhouseholds and individuals. These improvements ultimately translate into higherincomes, increased food consumption, better nutrition, and favorable shifts in theallocation of individual and household assets (Adato & Meinzen-Dick, 2007; Hazell& Haddad, 2001; Meinzen-Dick, Adato, Haddad, & Hazell, 2003). Technologiessuch as improved crop varieties, human and livestock vaccines, and information andcommunications technologies have generated impacts through these pathways.Yet, despite the impressive body of knowledge on technological change and poverty

reduction, realities on the ground suggest that the poverty-reducing impact oftechnology has been limited in many parts of the developing world, particularlywith respect to agriculture. Even despite the impressive gains associated with the

Agribusiness, Vol. 26 (1) 143–173 (2010) rr 2010 Wiley Periodicals, Inc.

Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/agr.20221

143

science-led Green Revolution of the late 1960s in parts of Asia and Latin America,the absolute number of poor people in many countries continues to rise, even thoughthe incidence of poverty may be on the decline. Of course, the causes of poverty arecomplex, and a lack of technology is just one factor: socioeconomic institutions,political economies, organizational behavior, and many other factors are also at play.Nonetheless, it is still important to recognize the continuing role of technological

change in agricultural development and poverty reduction and, further, thattechnological change can no longer be advanced solely by public-sector investmentin agricultural research and development (R&D). To advance pro-poor agriculturalR&D—i.e., R&D that enhances agricultural productivity; increases income-generating opportunities; diversifies livelihood options for the poor; improvesnutritional intake among vulnerable social groups; or otherwise contributes toalleviating poverty through complex, often context-specific, pathways—greaterprivate (for-profit) investment is mandatory (Adato & Meinzen-Dick, 2007).In most countries, investment and interventions need to be targeted toward groups

of individuals, households, and communities that live at or below the poverty line,are small scale and resource poor, and have limited trading opportunities. To date,however, most private R&D investment in developing countries has focused on asmall set of crops, traits, and technologies in response to the needs of large-scale,capital-intensive farm operations that mirror farming systems in industrializedcountries and contribute little to pathways out of poverty. Such investments tend tooverlook the needs—and commercial potential—of the small-scale, resource-poorfarmers who dominate the agricultural sector in many developing countries. As aresult, such farmers have been largely passed over by the private sector’s estimatedUS$862 million research investment in the developing world (Pardey, Beintema,Dehmer, & Wood, 2006).The emerging interest in private R&D investment trends in developing-country

agriculture is not incidental: Rather, it reflects the need to respond to changingconditions in agriculture. First, growth in public expenditure on agricultural R&Dhas stagnated in many developing countries, with noticeable declines across Sub-Saharan Africa (Pardey & Beintema, 2001; Pardey et al., 2006). Public researchorganizations are increasingly viewed as inefficient and inflexible bureaucracies,dependent on donor funding and declining in their ability to produce much-neededhigh-quality R&D outputs (Byerlee, 1998; Rukuni, Blackie, & Eicher, 1998). Theinternational agricultural research system is struggling to redefine its own strategicroles and responsibilities, raising issues about its ability to support and strengthen itsnational public partners (Spielman, 2007; World Bank, 2004). Second, the privatesector has emerged as a major force in the production and ownership of newgeneration technologies in the areas of plant biology, information, and communica-tions, suggesting that access to these technologies by developing countries willdepend on their ability to attract and stimulate private investment in R&D (Pray,Fuglie, & Johnson, 2007; Pray & Umali-Deininger, 1998). The introduction ofstronger intellectual property rights (IPR) regimes in some developing countries,particularly with respect to the protection of biological innovations, suggests thatthese countries are taking this issue seriously by improving the ability of firms toappropriate the returns to their R&D investments. In light of these changingrealities, many developing-country policymakers are looking to the private sector to‘‘fill the gap’’ by delivering pro-poor technologies (Pray & Umali-Deininger, 1998),

144 NASEEM, SPIELMAN, AND OMAMO

Agribusiness DOI 10.1002/agr

but it would be unrealistic to expect that the private sector could do this on its own—a host of market, organizational, and policy factors must be in place.In this article, we seek to identify these factors, arguing that in many developing

countries the necessary conditions for stimulating private-sector supply of technol-ogies that are simultaneously productivity-enhancing and poverty-reducing arelargely absent. The standard explanations for the lack of private-sector participa-tion—i.e., small markets, low appropriability, prohibitive costs, and unmanageablerisks—are relevant, but they do not capture the complexities of the R&D market andthe disincentives created by high transaction costs, poor institutions, and weak R&Dpolicies. We examine various options that may foster private-sector participation inR&D, paying particular attention to the role of economic incentives. Because theempirical literature on R&D incentives for developing-country agriculture is limited,we include references to empirical evidence garnered from agriculture in industrializedcountries where such evidence can inform the analysis.The remainder of the article is structured as follows. Section 2 provides an

overview of private investment in agricultural R&D and emerging trends indeveloping countries. In Section 3, we explore recent changes in the conceptualthinking that underlies the study of the determinants of private investment inagricultural R&D in developing countries. In Section 4, we examine the empiricalrecord on ‘‘push’’ mechanisms employed to encourage greater private R&Dinvestment in developing-country agriculture, and in Section 5 we examine similar‘‘pull’’ mechanisms. We offer concluding remarks in Section 6.

2. PRIVATE AGRICULTURAL RESEARCH

Private investment in R&D in developing-country agriculture has a rich historybeginning in the 19th century with research on cash crops produced by colonialfarming operations, including research on tea, coffee, rubber, and palm oil cultivatedon plantations in Asia; research on wheat and maize grown on haciendas in SouthAmerica; and research on bananas produced by multinational corporations inCentral America (Pray & Umali-Deininger, 1998; Pray et al., 2007). During the post-World War II period, private R&D investment made use of breakthroughs inchemical and mechanical engineering, and shifted into a wider array of research in theareas of fertilizers, pesticides, farm machinery, and varietal improvement. Though thebulk of this research was conducted by firms based in industrialized countries, someprivate R&D investments were made in developing countries to transfer and adaptthese technologies to local conditions (Pray & Umali-Deininger, 1998).Today, most private investment in agricultural R&D is distributed across six

subsectors: (a) plant biology; (b) plant breeding and the production of seed andplanting materials; (c) agrochemicals, including chemicals for plant protection,fertilizers, and biotechnological applications; (d) food processing, storage, andtransport; (e) animal and livestock improvement; and (f) agricultural equipment andmachinery. About one third of global private investment in agricultural R&D isdirected toward agricultural chemicals, most significantly pesticides (Pray & Fuglie,2001). Food processing, storage, and transport also attract a significant share ofprivate-sector investment in agricultural R&D (Pardey & Beintema, 2001).Subsectors (a) and (b) form the primary focus of this article. Arguably, advancesin these areas will provide the foundation for improving agricultural productivity

145PRIVATE-SECTOR INVESTMENT IN DEVELOPING-COUNTRY AGRICULTURE


because they enhance the essential reproductive powers of the seed; technologiesgenerated in all the other subsectors will supplement or add value to this power.In 2000, the private sector spent an estimated US$862 million on agricultural R&D

in developing countries (Table 1), although estimates run as high as $2 billion when acertain share of private agricultural input sales is included (James, 1997).1 Country-level estimates of private spending on agricultural R&D also vary considerably(Table 2). Using the first set of figures (presented in Table 1), private spending onagricultural R&D in developing countries accounts for just 6% of all expenditure onagricultural R&D by both the public and private sectors in developing countries, andjust 2% of public and private expenditures worldwide (Pardey et al., 2006).Moreover, in all countries, public R&D expenditures exceed those of the privatesector, with private–public expenditure ratios ranging from 0.01 (for Ethiopia) to 0.5(for Colombia).Private R&D tends to focus on specific types of commodities for which returns are

easily appropriable. In Asia, for instance, private R&D is concentrated in cash crops,such as palm oil, rubber, tea, vegetables, and horticulture; hybrid varieties of rice,sorghum, millet, and maize; and livestock hybrids, such as poultry (Gerpacio, 2003;Morris, 1998; Morris, Singh, & Pal, 1998; Pray & Fuglie, 2001; Tripp & Pal, 2001).2

In Latin America, private R&D tends to focus on bananas and hybrid maize. In fact,Morris (2002) reports that private investment in maize R&D is approximately twice

TABLE 1. Public- and Private-Sector Expenditure on Agricultural Research, Circa 2000

Expenditure

(2000 million U.S. dollars, PPP adjusted)aShare of total

expenditure (%)

Region Public Private Total Public Private

Developing countries 12,819 862 13,682 93.7 6.3

Developed countries 10,191 12,086 22,277 45.7 54.3

Total 23,010 12,948 35,958 64.0 36.0

Note. Data from Pardey et al. (2006).aFigures are expressed as real expenditures, calculated by deflating nominal expenditures in local currency

using a 2000 price deflator, and converting to U.S. dollars using purchasing power parity (PPP) exchange

rates for 2000.

1The estimate of $2 billion by James (1997) assumes that a certain share of private agricultural input

sales is attributed to R&D. The difference in these figures illustrates the challenges that scarce data pose

when it comes to estimating private R&D investment in developing-country agriculture. This scarcity

results from several factors. First, private firms in many developing countries do not regularly report their

R&D expenditures to public authorities for statistical, taxation, or other purposes. Second, where firms do

report such expenditures, very few (in either developing or developed countries) provide detailed

breakdowns by crop, technology, region, and so on. Third, firms—particularly small firms in developing

countries—rarely separate research expenditures from other expenditures where tax incentives for research

do not exist. Finally, given the central role of public R&D in developing countries, few data collection

initiatives (including those by the Food and Agriculture Organization of the United Nations [FAO], the

Organization for Economic Co-operation and Development [OECD], the World Bank, and the

International Food Policy Research Institute [IFPRI]) emphasize the collection of private-sector data.2Private investment in hybrid poultry is highly prevalent; Narrod and Fuglie (2000) find that 99 percent

of Brazilian poultry, 81 percent of Thai poultry, 70 percent of Philippine poultry, and 62 percent of Indian

poultry are derived from breeds developed by just seven private firms based in developed countries.



that of the public sector in both Latin America and Asia. In Africa, where the privatesector conducts relatively little R&D, the focus has been on export commodities suchas cacao, tea, and coffee, for example, in Kenya (Ndii & Byerlee, 2005).It is no surprise that private R&D investment tends to focus on export crops, for

which returns in international markets create investment incentives, or on hybridcrops, for which the loss of vigor over successive generations compels farmers torepurchase seed (or, in the case of poultry, chicks). It is also no surprise that privateR&D investment tends to focus on technologies that are either capital-intensive orlabor-saving (or both) because labor is often considered a relatively more difficultproduction factor to manage due to the potential difficulty of enforcing contractswith agricultural workers.As a result, private R&D investment tends to focus on crops other than those that

are essential to developing-country livelihoods. Such crops include cereal crops, suchas sorghum, barley, or millet; open-pollinated maize varieties for which farmer seed-saving practices cannot easily be controlled; vegetatively propagated crops, such aspotatoes, sweet potatoes, yams, and cassava, for which similar farmer practicescannot easily be controlled; ruminant livestock; and many other underutilized cropspecies (see Gruere, Giuliani, & Smale, 2006; National Research Council, 1996, 2006,2008; Padulosi et al., 2002).The emerging field of agricultural biotechnology (agbiotech) illustrates the private

sector’s specific research focus and how, globally, private investment significantlyovershadows public investment—though not in all developing countries (Spielman,2007). A useful indicator of the level and growth of private R&D in agbiotech is the

TABLE 2. Public and Private Agricultural R&D Expenditure in Developing Countries

Region/country Year

Private R&D as share

of agricultural GDP

Private/public

expenditure ratio

Asia

China 1995 0.011 0.03

India 1995 0.062 0.16

Indonesia 1995 0.017 0.07

Malaysia 1995 0.148 0.27

Pakistan 1995 0.042 –

Philippines 1995 0.069 0.29

Thailand 1995 0.107 0.13

Latin America and the Caribbean

Belize 1996 0.618 –

Brazil 1996 0.051 0.05

Columbia 1991 0.002 0.52

Dominican Republic 1993 0.001 –

Mexico 1996 0.108 0.10

Africa

Ethiopia 1998 0.003 0.01

Kenya 2000 0.044 0.03

South Africa 2000 0.158 0.04

Note. Values are computed from underlying data reported in Pray and Fuglie (2001) for Asia (except

Pakistan), Falconi (1994) for Columbia, and ASTI (2005) for the remaining countries. R&D5Research

and development; GDP5 gross domestic product.



number of field trials approved by government inspection agencies and conducted byprivate firms (Table 3). In both developed and developing countries, the majority offield trials are conducted by multinational firms (460%), establishing them as theclear leaders in the technology’s developmental pipeline. Furthermore, a significantportion of agbiotech R&D in developing countries has been geared towardtransferring genetically modified (GM) varieties for a few highly tradable cropsfrom industrialized to developing countries where cultivation is typically conductedon large-scale farms. Examples include herbicide-tolerant soybeans introduced inArgentina and insect-resistant cotton in Mexico and Argentina. The area planted toGM crops across the world is presented in Table 4; it is clear that most GM varietiesare concentrated in a few countries and on a few crops, suggesting that many benefitsfor the poor, especially in Sub-Saharan Africa, have been limited.More recently, R&D in the area of agbiotech has expanded to include adaptations

of local varieties that are more suited to different agroecologies in developingcountries and different types of farmers (including small-scale farmers). Examplesinclude insect-resistant maize in South Africa and insect-resistant cotton in China,India, and South Africa (Pray, Oehmke, & Naseem, 2005; Smale, Zambrano, Falck-Zepeda, & Gruere, 2006). However, a review of data on GM crop cultivationcompiled by James (2006) suggests that the majority of agbiotech R&D outputs arestill focused on internationally traded commodities produced on large-scale farms.Underlying the growing role of private investment in agricultural R&D is a rapidly

changing industry structure highlighted by increasing knowledge intensity, strategicconsolidation, and vertical integration. These characteristics imply a central role forlarge foreign firms in the conduct of agricultural R&D and in the supply of newtechnologies to developing countries.Industry consolidation in agricultural R&D began in the 1990s, as large

multinational firms recognized that potential research synergies could be realizedby integrating biotechnology research in human, animal, and plant biology,chemistry, medicine, and agriculture (Brennan, Pray, & Courtmanche, 2000; King,2001). As a result, the agricultural R&D industry has become highly concentrated(Oehmke, 1999). In the United States, for example, the four-firm concentration ratioin the U.S. cotton seed market reached 87% by 1998; the ratio reached 67% in thecorn market and 49% in the soybean market (Hayenga & Kalaitzandonakes, 1999;King, 2001). The majority of the field trials of genetically modified crops in theUnited States are conducted by a handful of firms; this is evident in Figure 1, which

TABLE 3. Distribution of Field Trials on Genetically Modified Crops in Developed and

Developing Countries, 1987–2000

Sector/region Developed countries (%) Developing countries (%)

Public sector 8 16

Universities 4 12

Multinational firms 70 61

Other private firms 10 8

Unidentified 8 11

Total 100 100

Note. Data from Pray, Courtmanche, and Govindasamy (2002).



shows the number of field trials attributable to the top four firms relative to all otherfirms (i.e., the CR4 ratio). Concentration has increased for all major crops that havebeen genetically modified and field-tested, with the CR4 ratio greater than 0.9 forsoybeans, cotton, and potatoes. In Asia during the mid-1990s, private research byforeign (largely multinational) firms based in the United States and Europeaccounted for an estimated 45% of all private research (Pray & Fuglie, 2001).Internationally, sales of agbiotech products are dominated by Monsanto (St. Louis,MO), accounting for 88% of the world market (Fulton & Giannakas, 2001).3

The high degree of industry concentration in agricultural R&D—particularly inbiotechnology R&D—has implications for developing-country R&D. With greater

TABLE 4. Area Planted to Genetically Modified Crops, 2005

Region/county

Area planted

(million ha) Crops

North America

Canada 7 Canola, maize, soybeans

Mexico 0.1 Cotton, soybeans

United States 57.7 Soybeans, maize, cotton, canola,

squash, papaya, alfalfa

Latin America

Argentina 19.1 Soybeans, maize, cotton

Brazil 15.0 Soybeans, cotton

Chile o0.05 Maize, soybeans, canola

Colombia o0.05 Cotton, carnation

Honduras o0.05 Maize

Paraguay 2.6 Soybeans

Uruguay 0.5 Soybeans, maize

Europe

Czech Republic o0.05 Maize

France o0.05 Maize

Germany o0.05 Maize

Poland o0.05 Maize

Portugal o0.05 Maize

Romania 0.05 Maize

Slovakia o0.05 Maize

Spain 0.1 Maize

Asia

Australia 0.1 Cotton

China 3.8 Cotton, tomatoes, poplars, petunias,

papayas, sweet peppers

India 6.2 Cotton

Philippines 0.3 Maize

Africa

South Africa 1.8 Maize, soybeans, cotton

Note. Data from James (2006).

3Note, however, that there is some evidence that the consolidation process has reversed itself in recent

years (King, 2001). Some of the major multinational life-science firms have either divested their

agricultural technology divisions, reducing operational size and financing, or sold the divisions outright.



concentration, a small number of firms control key platform technologies necessaryfor downstream and applied research. Given that many of these technologies areproprietary, developing countries will have to establish access mechanisms tofacilitate technology transfer, either directly through foreign direct investment orindirectly through partnerships. Concentration will also require governmentantitrust authorities to carefully weigh the dynamic efficiency gains of newinnovations against the static losses from monopoly pricing. In many instances,this will require the creation of new institutions and policies that recognize theemerging role of the private sector in delivering much-needed pro-poor technologiessuited for developing countries.

3. A CONCEPTUAL FRAMEWORK

The emerging trends discussed above suggest the need for a conceptual frameworkthat expands on the conventional explanation of low private-sector participation inR&D markets—namely thin markets and a lack of appropriability (Evenson &Kislev, 1975). The nonrival and nonexcludable attribute of the good, to a largeextent, defines the scale and scope of R&D conducted by public- and private-sectorfirms. For example, most basic research produces pure knowledge, to which propertyrights cannot effectively be assigned. For this reason, most research on public goodsis undertaken by a taxpayer-financed research sector.Nevertheless, more recent studies argue that agricultural R&D can also take the

form of an ‘‘impure’’ public good (see, for example, Dalrymple, 2006; Sandler, 2003;Spielman, 2007). These studies suggest that, where the properties of nonrivalry andnonexcludability can be limited by institutions and policies that govern use andappropriability, the good’s nature changes. This, in turn, affects the ease with whichthe good can be consumed or imitated, the shared nature of its production by publicand private researchers, the context or industry specificity of its consumption, thespatial level at which the good is produced or consumed, or other complicatingfactors.

Figure 1 Industry concentration in GM field trials, 1990–2007. Source: Authors’ calculation

using U.S. Department of Agriculture Animal and Plant Health Inspection Servise (USDA

APHIS) data.



Another way of understanding this property is to view agricultural R&D as acommodity that exhibits both public and private components (ranging fromknowledge creation to commercial product deployment), and often requires someform of sectoral interaction (e.g., the transfer of knowledge from the public to theprivate sector as a means of supporting commercial product development anddeployment). Thus, assessments of the societal gains that accrue from publicinvestments in knowledge creation are accurate only to the extent that theyincorporate the private investment in product development and deployment neededto make such knowledge available for consumption in society (Dalrymple, 2006).This necessarily challenges the conventional dichotomy between public and privategoods.Although the nature of the good and the institutional context within which the

good is produced and exchanged often determine the degree of appropriability,additional factors must be considered. Market structure, for example, may determinethe extent to which a firm can appropriate rents from innovation: Monopolistic firmsare more likely to capture the benefits of their research because their market poweraffords them the ability to set prices or quantities. Similarly, vertically integratedfirms are able to appropriate rents from innovation more easily by incorporatingsuch innovations into their own downstream activities, thereby reducing the internalcosts of production.Another cause of the chronic undersupply of agricultural R&D by the private

sector is weak market access and purchasing power among smallholders as end-usersof R&D outputs, combined with weak regulatory regimes in developing countriesthat inadequately ensure the innovator’s ability to appropriate returns to R&Dinvestments. Arguably, this situation arises because many developing countries arecaught in a technology ‘‘gap.’’ In essence, their technological change is dependent onthe absorptive capacity of their agents—i.e., their ability to learn, adapt, andchange—and their ability to move incrementally to products and activities of greatertechnical sophistication and institutional complexity. Technology gaps emerge andexpand as promising technologies progressively attract greater learning, and asimpediments to diffusion are progressively overcome by some agents but not others(Arthur, 1988; Dosi, 1988; Nelson & Winter, 1982). Where such gaps prevail, anddynamic returns to technology adoption and learning further widen the gap, marketsare rarely able to relate varying future growth efficiencies to current relativeprofitability signals. In short, market signals are insufficiently specific.In summary, characterizing the undersupply of private R&D simply in terms of

public or private goods is insufficient. Rather, a more nuanced understanding ofcomplex R&D processes, and the institutions that condition these processes, isneeded. This challenge points to a role for ‘‘bridging institutions’’ of various types,including institutions that encourage (a) learning and experimentation with respectto new information, knowledge, procedures, and prototypes; (b) the integration ofinnovation along the continuum from basic, to applied, to adaptive research; (c) theconversion of technically workable innovations into commercially feasible ones; and(d) the transformation of R&D uncertainties into manageable risks.This calls for the identification of institutional arrangements and organizational

mechanisms to promote greater private investment in agricultural R&D and tosupport rapid innovation—i.e., the production, exchange, and use of economicallyor socially relevant knowledge—without necessarily compromising individually



costly behavior that is beneficial when reciprocated. Specifically, this requiresinstitutional arrangements and organizational mechanisms to provide incentives forprivate investment in agricultural R&D through a continued, but altogetherdifferent, public role in agricultural R&D.First, the public sector must provide forms of economic stabilization that only

governments can provide, including stable patterns of economic signals, such asrelative prices and profitabilities. Second, the public sector must provide the basis foran agricultural science and technology ‘‘system,’’ i.e., the structures and processes forsetting priorities; specifying agendas, financing, organization, delivery, monitoring,and evaluation; and assessing agricultural research, extension, and educationimpacts (Omamo & Naseem, 2005). Third, the public sector must implementpolicies that catalyze the emergence of institutional mechanisms, organizationalbehaviors, and learning patterns that facilitate innovation. Such a role for the publicsector would go a long way in fostering greater private investment in agriculturalR&D.In the next two sections, we examine the alternative mechanisms designed to

stimulate private R&D. These mechanisms can be categorized either as those thatreduce the costs of R&D and promote basic research to encourage spillovers (‘‘push’’mechanisms) or those that increase the expected returns to R&D by improving orcreating favorable market conditions (‘‘pull’’ mechanisms). The literature isextensive in terms of both the conceptual foundations underlying these mechanismsand their impact on private R&D investment in industrialized-country agriculture(e.g., Alfranca & Huffman, 2001; Day-Rubenstein & Fuglie, 2000; Hall & vanReenen, 2000; Wright, 1983). Far fewer studies, however, explore these mechanismsin context of developing-country agriculture, and fewer again explicitly addresscrops, traits, and technologies of relevance to small-scale and resource-poor farmers,food-insecure households, and other vulnerable social groups.

4. PUSH MECHANISMS TO STIMULATE PRIVATE R&D INVESTMENT

The purpose of push mechanisms is to reduce the cost of conducting R&D anddeveloping new products. These mechanisms take the form of explicit or implicitsubsidies on input costs. They include mechanisms to encourage spillovers fromupstream or basic public research, reduce the capital costs of conducting R&D,lower the costs of meeting regulatory requirements, reduce the risks of productliability, provide tax credits for R&D, provide tariff exemptions for importing keyresearch inputs, or provide R&D grants. Several of these mechanisms are reviewed indetail below.

4.1. Public Research

Private investment in agricultural R&D is partly determined in the public sector. Thecost of private R&D is often reduced by spillovers generated from public research,such as basic research in concepts and methods, or by the provision of improvedgermplasm, inbred breeding lines, and foundation seed at nominal costs. A study inIndia found that the International Crops Research Institute for the Semi-AridTropics (ICRISAT) serves as a major source of germplasm for sorghum and milletbreeding firms, supplying nearly 65% and 80%, respectively, of private firms covered



in the study’s survey (Ramaswami, Pray, & Kelley, 2002). Similarly, public researchorganizations in India provide germplasm to 66% of cotton breeding firms.Yet there is limited empirical evidence to suggest that public research spillovers

stimulate private R&D investment in developing-country agriculture. At the heart ofthis is the issue of whether public research is a complement to or a substitute forprivate R&D. Resolving this issue is important in shaping research policy: If thesecond scenario is true, justifying public support for R&D becomes considerablyharder. A review of the literature by David, Hall, and Toole (1999), suggests that thepreponderance of evidence would support the complementarity hypothesis, but theauthors rightly caution that this observation is based on an unweighted summary ofstudies rather than a careful statistical meta-analysis.Another study by Alfranca and Huffman (2003) demonstrates that public

agricultural R&D in Europe might have had a crowding-out effect on privateR&D during their sample period (1986–1995), suggesting that many Europeancountries have invested in applied research that competes with the private sector, andthat these countries may not have invested sufficiently in basic research. The authorsfurther argue that the sale of public agricultural research units to the private sector inseveral European countries (e.g., United Kingdom and the Netherlands) suggeststhat these countries recognized and responded to this crowding-out effect. Thesubstitution effect of agricultural R&D is also observed in the United States, wherepublic-applied breeding is found to compete with private breeding.4 Fuglie andWalker (2001) find that decreases in public breeding led to a statistically significantincrease in private breeding for a given commodity and that the net effect of theincrease on private-sector R&D was positive.Whether public-sector agricultural research in developing countries substitutes or

complements private research remains to be investigated, but it can be hypothesizedthat some private research is being crowded out by public research for two reasons.First, public research activities in developing countries tend to be applied, especiallyrelative to research in developed countries, and second, by its very nature,agricultural research is often applied (e.g., plant breeding). So, if public agriculturalresearch is in direct competition with private agricultural research (which is alsoapplied) the potential for crowding out certainly exists. Whether, and to what extent,the current state of low levels of private R&D in developing countries is due to thepossible effects of crowding out needs to be empirically examined.In addition to directly supporting research activities in the public sector, public

policymakers can enhance the performance and competitiveness of private enterprisesby providing reliable research infrastructure and support services. Support for publicresearch universities, for example, would create a highly skilled labor pool that privatefirms could readily tap into. Likewise, small firms with limited capacity to conducttheir own R&D could leverage the research capabilities of the public sector.

4.2. Taxation Policies

Fiscal policies such as tax breaks and investment credits for R&D are often used tolower the costs of R&D, thereby making investment more attractive to the private

4This may be the case only with respect to applied plant breeding, given that the study finds

complementarities between the public and private sectors in more general plant-breeding activities.



sector. R&D tax credits have been widely used in Organization for EconomicCo-Operation and Development (OECD) countries since the early 1980s, but theyare in place in only a few large developing countries (e.g., India, Mexico, andBrazil). Thus, most economic analyses of this policy intervention have focused ondeveloped countries, although there are important implications for developingcountries.Available evidence on the effectiveness of R&D tax credits suggests that they can

be an effective mechanism for stimulating private R&D. Hall and van Reenen (2000)review the literature on R&D tax credits by examining the implementationarrangements used in different countries at different times, along with their impactson R&D. Their study highlights considerable differences in the ways that privatefirms realize R&D tax credits, such as what types of industries receive credits (e.g.,the computer industry in Brazil), what sized firms are targeted (e.g., small- andmedium-sized enterprises in France), whether the R&D tax rate is incremental (and ifso, the base level above which the increment is applied), how much of the tax creditcan be applied to R&D conducted in foreign jurisdictions, and the speed at whichR&D capital can be depreciated (noting that a faster depreciation rate implies alower user cost of R&D).Variations in the application of R&D tax credits have allowed researchers to

evaluate their effectiveness using a number of techniques. Most of the studiesreviewed by Hall and van Reenen (2000) estimate the level of private R&D as afunction of a price variable—the user-cost of R&D—with appropriate controls forother variables, such as past output and expected demand. This method allows forinterpretation of the estimated R&D response as an elasticity measure with respectto price, but it can be difficult to implement due to difficulties in calculating the user-cost of R&D. An alternative procedure is simply to introduce the R&D tax credit asa dummy variable.The Hall and van Reenen (2000) survey finds that in the United States, R&D tax

credits produce roughly a dollar-for-dollar increase in R&D spending on the margin,although the schemes tend to have a lagged effect as firms modify their R&Dspending in response to the incentive. Consequently, many early studies found thattax credit schemes provided weak incentives when first introduced, but that theirlonger-term potential was not insignificant. Few studies have examined the effects ofR&D tax credits in developing countries, but studies from developed countries, suchas Australia, Canada, and France, draw similar conclusions to those described above(Hall & van Reenen, 2000). These findings have been further validated by Bloom,Griffith, and van Reenan (2002) who use panel data on tax changes and R&Dspending in nine OECD countries over a 19-year period (1979–1997). Controlling forcountry-specific characteristics and policies, they find that a 10% decline in the costof R&D stimulates a 1% increase in R&D investments in the short run and a 10%increase in the long run.Tassey (2007), however, raises a number of concerns about R&D tax credits. First,

the incremental nature of most R&D tax credit schemes favors short-term projects tothe detriment of many small startup firms that have little initial revenue. Second, andperhaps more relevant for developing countries, the complexity involved indetermining what qualifies under an R&D tax credit suggests that broad creditschemes would result in revenue leakages to ineligible firms, and targeted creditschemes may be too limiting to be effective. Third, referencing R&D of benefit to



developing countries but conducted in industrialized countries, few schemes aredesigned to encourage R&D conducted abroad, especially in agriculture where localagroecological conditions are particularly critical to R&D. These difficulties,combined with increasing recognition that the size of a tax credit directly relatesto its effectiveness, might explain why many developing countries have not adoptedsuch schemes, particularly in the agricultural sector. As for the implementation ofsuch schemes in developing countries, such as India, Mexico, and Brazil (mostly innonagricultural sectors), their effectiveness has yet to be empirically evaluated.

4.3. R&D Subsidies

Research and development subsidies to firms, often provided in the form of researchgrants, are another mechanism through which governments can provide investmentincentives. These grants, such as the Small Business Innovation Research (SBIR)program in the United States can be particularly important in ensuring thecommercialization of new technologies developed by small companies. Lerner (1999)studied the long-term effectiveness of SBIR programs, comparing the subsequentgrowth of 541 recipients against a set of 894 matched nonrecipients. Lerner (1999)found that growth among the recipient firms was in fact greater than among thematched nonrecipient firms in terms of both sales and employment. The recipientswere also found to have received more venture capital to establish their businesses asresult of the SBIR awards. Although the results lacked consistency across industriesand locations, they certainly suggest that research subsidies offer the benefit ofsignaling firm quality.Similar schemes have been established by public research agencies in developing

countries; however, the available evidence suggests that such programs have hadlimited impact on firm-level R&D spending in part because of inadequate funding orpoor administration. Despite its mature research infrastructure, India, for example,does not extensively support private research activities through grants. Mani (2001)suggests that this is due to the low demand for innovation by the private sector, andthe limited interaction between public research labs and private firms. Even if theappropriate funding mechanisms were in place to actively support private research,many countries lack the necessary human resources to be able to take advantage offinancial incentives (Mani, 2001).The relative absence of private investment in agricultural R&D in many

developing countries suggests that these research grants are actually used andrecycled within the public research system. Thus, Gill and Carney (1999), inreviewing 10 case studies of competitive agricultural research funds in developingcountries find that few are actually effective. They conclude that when countries havesufficient R&D capacity, competitive funding mechanisms can contribute to researchefficiency, but for countries with a small or weak research infrastructure it is better tobuild up institutional capacity or develop regional funding mechanisms.In a study of agricultural R&D in Mexico based on key informant interviews and

document analysis, Ekboir (2004) found that, whereas competitive grants reducedpolitical and bureaucratic interference in public research and encouraged public-sector researchers to undertake collaborative R&D (presumably at times with theprivate sector), they had no significant impact on the allocation or management ofresources for research.



4.4. Technology Commercialization Programs

Commercialization programs have proven to be an effective means of promotingprivate R&D investment. Widely cited examples included the Cooperative Researchand Development Agreements (CRADAs) used in the United States. Theseagreements facilitate the transfer of public research to private companies, are madepossible by a series of laws that allow for the licensing of federally owned IPR toprivate firms (the Bayh-Dole Act of 1980), and establish procedures for transferringpublic technologies to private firms (e.g., the Stevenson-Wydler Act, 1980; theFederal Technology Transfer Act, 1986; the National Technology Transfer andAdvancement Act, 1995; and the Technology Transfer Commercialization Act, 2000).Studies focusing on technologies, products, and costs associated with CRADAssuggest that they are fairly successful. Link (2002) finds that CRADAs are critical inhelping firms to leverage public (financial, informational, and infrastructural)resources for R&D. Day-Rubenstein and Fuglie (2000) and Parker, Castillo, andZilberman (2001) similarly find that CRADAs are particularly effective in promotingthe commercialization of public agricultural research in the United States.

4.5. Regulation and Regulatory Systems

Regulation and regulatory systems serve two broad purposes. First, they can instillconfidence among consumers that a given technology is safe—for use in production,for individual consumption, or for the wider environment (Pray & Naseem, 2003),and second, they reduce uncertainty and fears of liability among innovators, therebypromoting greater willingness to conduct R&D. Thus, regulations and regulatorysystems play a pivotal role in facilitating private investment in R&D.Consider, for example, the market for improved seed. Because the genetic qualities

of seed are only discernible through utilization, experience, or reputation, privatefirms require a reliable means of conveying information about their product tofarmers. Reliable information transmission depends on some sort of regulatorysystem, e.g., seed certification, truth-in-labeling, or consumer protection (Gisselquist& van der Meer, 2001; Tripp, 2001; Tripp & Louwaars, 1997).Such regulatory systems, along with agencies and procedures to enforce the

regulations, can influence the willingness to invest in agricultural R&D. In China, forinstance, Zhang (2004) observes that the consumption of GM products is positivelyrelated to consumers’ knowledge that the product is regulated. In this case,regulation implicitly lowered the costs and risks of R&D investment by ensuringmarket demand for the end-product embodying the technology.Conversely, the absence or weakness of a regulatory system can impede investment

in agricultural R&D, e.g., the slow development of biosafety regulatory systems inmany developing countries is often viewed as the key determinant of slow growth ofagbiotech R&D (Cohen, 2005; Cohen & Paarlberg, 2002; Kent, 2004; Spielman,Cohen, & Zambrano, 2006). Even in countries such as Brazil, China, and India,where biosafety regulations are in place, the quantity and rate of GM crop approvalhave been low. This may be partly attributable to inefficient regulatory processeswith overly bureaucratic or nontransparent procedures or arbitrary decisionmakingby regulators. If regulatory processes are too uncertain, cumbersome, or costly, firmswill be less likely to invest in R&D. This may partly explain why Monsanto withdrew



from attempts to introduce biotechnology-engineered cotton in Indonesia(Chapman, Quemada, Kent, & Herman, 2003).Overly stringent and costly regulatory requirements can also create disincentives to

R&D investment. Insurmountable or restrictive regulatory requirements can act asbarriers to entry by small- or medium-sized firms, reduce market competitiveness,force end-users to contend with higher prices, or slow the rate of innovation(Spillane, 2002). These same requirements can also inhibit the dissemination of moreupstream public research, which is a necessary input to private R&D. Cohen (2005),for example, reports that public research on agbiotech and GM crop developmenthas yet to move beyond early experimental stages in many developing countries inpart because public researchers are unable to meet health and environmental safetyregulations. These types of impediments are not only detrimental to public R&Ditself, but also to the critical spillovers that public R&D can generate to improveboth food staples crops (e.g., maize or wheat) and highly tradable commercial crops(e.g., cotton).

4.6. Research Parks and Zones

Research parks are property-based policy interventions that provide land andinfrastructure to private firms with the intention of generating external economies ofscope and scale (Appold, 2004). Often, these external economies accrue by placingresearch parks close to research universities or government research facilities, or byproviding easy access to scientific expertise and equipment in such organizations.Research parks are also used to allow university researchers to start their own firmsby developing ideas from their own research. In effect, they implicitly subsidize R&D.Research parks are particularly useful in countries where access to land, expertise,

or equipment poses a major barrier for startup and more established R&D firms. Inthe context of agricultural R&D in developing countries, examples include the Agri-Business Incubator (ABI) established by ICRISAT in Patancheru, India, and theAgronatura Science Park established by the International Center for TropicalAgriculture (CIAT) in Cali, Colombia. Though partly motivated by excess scientificcapacity in these two public research institutes, both parks are stimulating privateR&D investment by making public facilities and expertise available to local firms(Spielman, Hartwich, & von Grebmer, 2007). Nevertheless, economic analyses haveyet to be conducted on the contribution of science parks to stimulating private R&D.This is partly due to the difficulty in obtaining data on R&D spending by firms andby their novelty in the field of agricultural R&D.

4.7. Public– Private Partnerships

Public–private partnerships (PPPs) are broadly described as any joint public–privateeffort under which both parties share costs, risks, and benefits; contribute toplanning; and conduct activities to accomplish a mutual objective. Such partnershipsare recognized as a potentially vital means of realizing synergies in research thatrequire inputs and competencies from both sectors (Byerlee & Fischer, 2002; Pingali& Traxler, 2002). In economic terms, PPPs represent one of several means oforganizing the production of some output—in this case, knowledge and technol-ogy—while simultaneously addressing the constraints associated with imperfectionsin the exchange and use of knowledge. Public–private partnerships are specifically



designed to overcome impediments to what would otherwise be a costless process ofexchanging and using knowledge necessary to the innovation process. Suchimpediments are often institutional in nature, e.g., weak IPR, biosafety, orenvironmental protection regimes that discourage public research organizationsfrom sharing their research with private firms for fear of misuse or abuse; or theinability of public and private agents to learn about each other, identify areas ofcomplementarity and synergy, build and sustain trust through interpersonal ororganizational relationships, communicate and exchange ideas effectively, orrespond to leadership.Unfortunately, few studies provide insight into the economic value of PPPs

relative to other mechanisms. There are several explanations for this. First, becausethese institutional constraints are highly context-specific, it is often difficult tomeasure or control for variations in the purpose and design of a PPP, thus makingmeaningful comparisons difficult. Second, because PPPs are a relatively neworganizational mechanism for promoting agricultural R&D in developing countries,their actual outputs and impacts are still in the pipeline. Third, the costs associatedwith private contributions to PPPs, (e.g., technologies, expertise, or in-kindresources) are often hard to estimate, particularly when the contributions areproprietary or valuable trade secrets for the private partner. Fourth, an arguablyinsufficient number of comparable PPPs actually exist in the field of agriculturalR&D: PPPs in the Consultative Group for International Agricultural Research(CGIAR), a network of research centers that is most strategically placed to engage inglobal collaborative research initiatives like PPPs, represent just 4% of the CGIAR’saggregate financing over the 2001–2005 period (Spielman & von Grebmer, 2006).Nonetheless, recent studies by Binenbaum, Pardey, and Wright (2001), Pray

(2001), Chataway (2005), Spielman and von Grebmer (2006), and Spielman et al.,(2007) examine the role of research-based PPPs in developing-country agricultureand how these arrangements promote R&D under alternative organizationalstructures, incentive schemes, and policy scenarios. Findings generally suggest thatthe success of PPPs is closely tied to a complex set of issues relating to IPRownership and stewardship, inadequate risk management and mitigation strategies,conflicting organizational cultures, negative misperceptions across the sectors, andpoor project design.

4.8. Third-Party Brokering

Third-party brokers are organizations designed to reduce the costs and risksassociated with transferring technologies and tools from the private sector to thepublic sector, typically for research undertakings on pro-poor crops, traits, andtechnologies. Brokers include nonprofit organizations, such as the AfricanAgricultural Technology Foundation (AATF), the International Service for theAcquisition of Agri-biotech Applications (ISAAA), and the Public IntellectualProperty Resource for Agriculture (PIPRA), as well as advanced research institutessuch as the Donald Danforth Plant Science Center and CAMBIA. Many of theseorganizations play a critical role in facilitating interactions between the public andprivate sectors, assuming responsibility for the use of proprietary knowledge andtechnology, and focusing research priorities and execution toward pro-poor crops,traits, and technologies—particularly biotechnology. Little analysis of their role in



agricultural R&D has been undertaken, although Naylor et al. (2004) do note theirpotential in the transfer of proprietary knowledge. However, their contribution toand impact on technology development and poverty reduction remains largelyuntested.

4.9. Strengthening Innovative Capacity

Investments in country- and firm-level innovative capacity also play a critical role instimulating private R&D. Efforts to strengthen domestic research capacity indeveloping countries is critical in that such efforts help to accelerate the transfer anddiffusion of R&D conducted internationally or locally (Anderson, Pardey, &Roseboom, 1994; Evenson, 1974). Efforts to strengthen the wider systemic capacityof individuals and institutions to generate, exchange, and use knowledge andinformation are equally important (Dosi, Freeman, Nelson, Silverberg, & Soete,1988; Edquist, 1997; Freeman, 1987, 1988; Lundvall, 1985, 1988; Nelson, 1988;Nelson & Winter, 1982).This has implications for R&D in the context of the increasing complexity of

developing-country agriculture (World Bank, 2006). Specifically, this suggests theneed to focus efforts on improving individual and institutional capacity to undertakeand manage more collaborative R&D processes that exploit complementarities andgenerate synergies from among diverse sources of innovation (Christensen &Raynor, 2003; Christensen, Anthony, & Roth, 2004). Arguably, this means thatconventional methods of strengthening innovative capacity through investment informal secondary and tertiary education in science and technology are insufficient.Informal education such as in-service and on-the-job training is also needed topromote the transformation of knowledge stocks into commercially viabletechnologies, along with changes in the organizational cultures and practices ofresearch organizations (Davis et al., 2007).Greater innovative capacity can, in turn, stimulate greater private R&D

investment. Studies by Hall, Sivamohan, Clark, Taylor, and Bockett (1998), Clark(2002), and Hall, Sulaiman, Clark, Sivamohan, and Yoganand (2002) discuss howchanges in the ways researchers participate in the innovation process can leverageprivate-sector R&D in support of public research and strengthen wider innovationprocesses in society. These studies provide several useful examples on research inareas such as cultivar improvement and postharvest processing to illustrate how ashift in emphasis from a unidirectional technology transfers to a more complex,process-based systems approach can help move science and technology off the shelfand into societal application. Yet, as Spielman (2006) argues, public policies,incentive structures, and organizational mechanisms that can be used to buildinnovative capacity specifically relevant to facilitating pro-poor technological changehave yet to be adequately defined in the case of developing-country agriculture.

5. PULL MECHANISMS TO STIMULATE PRIVATE R&D INVESTMENT

Pull mechanisms are designed to encourage private R&D investment by creatingmore efficient, more stable, or larger markets by increasing the expected returns to orreducing the risks of R&D. These ‘‘pull’’ or demand incentives typically rewardprivate R&D successes by granting monopoly control over their R&D outputs,



increasing market opportunities through trade, and providing outright paymentsthrough advanced purchase agreements, rewards, or prizes. Pull mechanisms are anattractive alternative for policymakers because they rarely require ex ante resourcecommitments, instead rewarding innovators for successful R&D outcomes.

5.1. R&D Market Size and Structure

The hypothesis that larger market size stimulates greater private investment inagricultural R&D is largely supported by empirical evidence. Griliches (1957),Schmookler (1966), Griliches, Nordhaus, and Scherer (1989), and Scherer (1982a,b)show that innovative activity is significantly determined by the pull of demand,partly manifested in market size. Using panel data from seven EU countries over a10-year period, Alfranca and Huffman (2001, 2003) similarly confirm this hypothesiswith findings that the size of the agricultural sector has a concave effect on theelasticity of aggregate private R&D expenditures. This nonlinear relationship resultsfrom the large fixed costs associated with R&D; as market size increases, theincremental costs of R&D decrease.Case studies of seven Asian countries by Pray and Fuglie (2001) similarly indicate

that market size and research costs have a strong effect on private investment inagricultural R&D. Tests of the market-size hypothesis find particular strength inIndia, where market liberalization during the 1990s led to the expansion of privateR&D investment (Morris et al., 1998; Pray, Ramaswami, & Kelley, 2001; Tripp &Pal, 2001); in the Philippines, where demand growth in domestic and export marketssimilarly stimulated private R&D investment (Pray & Fuglie, 2001); and acrossdeveloping countries more generally with the withdrawal of state-owned seedmonopolies and public-sector seed projects financed by the donor community(World Bank, 1995, 1996).Furthermore, because private R&D often depends on the ability of a private firm

to access information, technologies, materials, and capital from foreign sources, therelative openness of a given economy can determine the degree of private investment(Gisselquist & van der Meer, 2001). Until the late 1980s, for instance, governmentregulations in India barred large Indian firms and firms with majority foreign equityfrom plant breeding and seed production. Import regulations on germplasm furtherprevented private-sector interests from importing germplasm for plant breedingpurposes (OECD, 1994).

5.2. Intellectual Property Rights

Intellectual property rights includes legal mechanisms, such as patents, plantbreeder’s rights, trademarks, and trade secrecy and biological mechanisms, such ashybridization, genetic use-restriction technologies, and other means of preventingimitation or copying. By conferring the innovator with monopoly rights over his orher innovation (albeit for a finite duration), IPR is designed to increase theinnovator’s ability to recoup his or her investment in R&D through exclusive rightsover the sale, licensing, or use of the technology. Unlike push mechanisms (e.g.,subsidies) or pull mechanisms (e.g., prizes), IPR does not require significant financialoutlays by governments and is therefore a lower cost means of encouraginginnovation. However, IPR does require investment in the establishment andmaintenance of effective regulatory and judicial systems to award and enforce IPR.



Laws to protect new plant varieties and biotech inventions spread rapidly todeveloping countries in the late 1990s. Their spread was accelerated by theintroduction of the Agreement on Trade-Related Aspects of Intellectual PropertyRights (TRIPS) under the World Trade Organization (WTO), which requires WTOmembers to establish some type of sui generis system of plant variety and patentprotection for biotechnology inventions by 2000 (although some developingcountries had an extended deadline until 2005). As of mid-2006, 61 states weremembers of the International Union for the Protection of New Varieties of Plants(UPOV), indicating that they had established some form of plant variety protection.The Agreement on Trade-Related Aspects of Intellectual Property Right has also

led to a strengthening of patent laws in many developing countries, a trend that mayhave some impact on agricultural R&D. Although a number of countries stillexclude novel plants and animals from patent coverage, many do allow patenting ofnovel microorganisms, including those used in agriculture. The role of IPR instimulating private research is particularly important for biotechnology research. Anumber of genes and biotechnological methods are owned by developed-countryfirms, and the transfer of these technologies will occur if the firms are confident thattheir intellectual property is adequately protected.Studies on the impact of IPR on agricultural R&D in developing countries rely on

a range of methodologies and suggest mixed outcomes. Empirical studies byGriliches (1957, 1989), Schmookler (1966), and Scherer (1982a,b) lend support to thehypothesis that IPR stimulate greater private investment in agricultural R&D.Country-level case studies in Asia by Pray and Fuglie (2001) arrive at similarconclusions. Similarly, at the economy-wide level, using cross-country data on thestrength of IPR, technological change, and other country-specific characteristics,Kanwar and Evenson (2003) find that IPR has a strong incentive effect oninnovation.The case in support of strong IPR regimes in agriculture is further articulated in

policy studies by Caswell, Fuglie, and Klotz (1994), Fuglie et al. (1996), Lele, Lesser,and Horstkotte-Wesseler (2000), and Nottenburg, Pardey, and Wright (2001).Central to these studies is the standard argument that IPR improves incentives toplant breeders, thereby increasing the flow of technological improvements tofarmers, while also allowing breeders to recoup their R&D investments.Yet this is only one explanation for the positive relationship between IPR and

private R&D investment. Intellectual property rights also reduce transaction costsfor plant breeders who would otherwise incur the costs of asserting property rightsover their information through other means, such as exclusion technologies,exclusivity contracts with farmers, monitoring of seed use and cultivation, or similararrangements.Butler and Marion (1985) were among the first to comprehensively study the

question of whether plant variety protection (PVP) certificates—a form of IPRprotection—affect private investment in agricultural R&D in the United States.Their descriptive and statistical analyses suggest that the private-sector stimulusresulting from PVP legislation enacted in 1970 was limited, at best. However, theirstudy was conducted just over 10 years after PVP legislation came into effect in theUnited States, a period that may have been insufficient to capture the effects of thelegislation on private-sector plant breeders. Now that PVP legislation has been inplace for at least 20 years in most developed countries, Srinivasan and Thirtle (2000)



argue that there is sufficient time and space for empirical study of this issue. To wit,Alston and Venner (2000) study the U.S. PVP Act of 1970 and its impact on private-sector investment in wheat breeding. Their econometric analysis suggests that theincreased appropriability attributable to the PVP Act resulted in neither an increasein private investment in wheat breeding nor an increase in experimental orcommercial wheat yields. At best, they find an increase in the proportion of varietiescultivated in the United States that were produced by private firms, from 3% of allvarieties in the 1970s to 30% in the 1990s. They argue that PVP certificationprovided private firms with a mechanism by which to market, differentiate, andassure the quality of their products.In one of the few studies on the impacts of plant breeders’ rights legislation on

private breeding, Pray (1992) uses a case study approach and descriptive analysis,finding that PVP-style incentives have had a significant and positive effect inincreasing the amount of private R&D in the United Kingdom, the United States(for soybeans), and France (for wheat). For the case of Argentina, the study findsthat PBRs had an effect on stimulating private breeding in wheat, but not othercrops. In Chile, PBRs did not have any impacts on private breeding. Theimplications of these findings are that IPR is a necessary, but not sufficient,stimulus for the transfer of agricultural technology and private investment in plantbreeding, and that enforcement systems are as important as legislation.In another study, Pray, Bengali, and Ramaswami (2004) measure the impact of

IPR and complementary institutions on biotechnology research. They find that plantbreeder’s rights and the strength of property rights in general were positivelyassociated with the spread of applied agricultural biotechnology research asmeasured by the number of biosafety field trials on GM plants. Other positiveand significant variables were the size of the countries’ seed industry, the amount ofcommercialization of the agricultural sector, and the amount of public biotechnol-ogy research in the country.Nevertheless, legal forms of IPR only explain part of the story: Intellectual

property rights can also be obtained indirectly, e.g., through the inherent biologicalcharacteristics of a technology or through the ability of a firm to maintain thesecrecy of the technology. Pray et al. (2001), for instance, find that the implicit IPRafforded by hybridization of rice and rapeseed have resulted in greater private R&Dinvestment for these particular crops. Gerpacio (2003) presents similar findings forhybrid maize in Asia.Moreover, firm and industry structure is also closely associated with appropria-

bility. Pray and Fuglie (2001) find that the vertical integration of plantation-basedfirms in the production, processing, and export of pineapples and bananas allows forsubstantial appropriation of innovation rents, particularly when compared withsmallholder production of crops, such as coconuts. Yet despite the strong incentiveeffects of IPR, there is little evidence to suggest that it has stimulated pro-pooragricultural R&D. There are two possible explanations for this: First, because mostcountries have only recently implemented IPR regulations, the likelihood of a lagprior to any R&D effect is high; second, most developing countries have weakinstitutions, making the implementation and enforcement of IPR difficult, whichrenders it ineffective. As such, approaches to strengthening IPR in developingcountries must be targeted and realistic if they are to result in innovations thatbenefit poor people.



Moreover, some evidence suggests that IPR has only limited impact onagricultural R&D. Binenbaum et al. (Binenbaum, Pardey, Zambrano, Nottenburg,& Wright, 2000; Binenbaum, Nottenburg, Pardey, & Zambrano, 2003) argue thatthe concerns about IPR restricting scientists’ freedom to operate are exaggeratedwith respect to research on food crops in developing countries. More specifically,they argue that modern crop technologies developed in industrialized countries arerarely protected by IPR in developing countries, allowing scientists to conductresearch (and farmers to cultivate) crops that embody such technologies without fearof litigation. It is only in the case of international trade—when crops fromdeveloping countries that embody unlicensed technologies are exported toindustrialized countries where licensing is required—that IPR may become an issue.However, the present volumes of trade that could potentially be subject to this issueis nominal relative to developing-country crop production destined for domesticconsumption. This suggests that both the research and trade dimensions of the IPRissue are, at present, a limited barrier to private investment in agricultural R&D indeveloping countries.

5.3. Trade and Foreign Investment Liberalization

Agricultural R&D in developing countries is also constrained by trade issues andglobal market segmentation. Foreign private firms might be willing to invest in smallcountries if the benefits of new technologies were manifested in the form of greateragricultural output that could be exported to foreign markets where prices arerelatively higher. The example of biotechnology is a case in point. Concerns aboutpossible developed-country trade embargos against countries growing GM cropshave resulted in restrictions on GM crop cultivation in some developing countries.The EU, for example, has effectively banned the importation of GM products, whichhas caused a number of countries, such as Egypt and Thailand, to delay theintroduction of GM crops (Kent, 2004). Even if some growers choose not to plantGM crops, the import ban would apply to all growers because few countries haveproper procedures in place to ensure the segregation of GM and non-GM products.Countries, therefore, need to consider the costs and benefits of adopting GM crops

carefully. In some instances, the premium offered to non-GM exporters is very smallrelative to the cost-savings from planting GM crops, justifying GM adoption onpurely economic grounds (Qaim & Traxler, 2005). Furthermore, Nielson, Robinson,and Thierfelder (2001) find that the gains from adopting GM technology are notaffected by the anti-GM policies of a few countries because the trade flows of GM andnon-GM products are redirected according to the preferences of individual countries.If the practical experience from trade in U.S. corn is any guide, then GM-adopting

countries could lose market share in GM-free countries, but pick up markets in othercountries where GM crops are not a concern. The example of GM soybeans inArgentina also suggests that, despite varying GM preferences across countries, thecompetitive advantage provided by considerable cost reductions outweighs anydemand-side constraints imposed by GM crop concerns. Argentina has dramaticallyincreased its exports of soybeans and soy products since adopting GM varieties inthe late 1990s, and most of these exports go to Europe.Agricultural R&D in developing countries can also be affected by regulations on

foreign direct investment. A foreign firm’s choice to invest in a country—and to



undertake R&D in that country—is often determined by the extent to which the firmcan maintain effective control over the R&D process, including (but not limited to)its intellectual property. By way of example, the growth in private R&D investmentin India is due in large part to the liberalization of its agricultural input markets andopenness to foreign direct investment (Pray et al., 2005).

5.4. Advance Purchase Commitments

By promising to purchase predetermined quantities of a specific technology at anagreed price, governments and donors can help private firms to overcome the smallmarket problem. Advance purchase agreements (also known as advance contracting)are not only useful for products in the advanced stages of development, but alsothose in the earlier stages of the research process. However, advance purchaseagreements rely on the strength, credibility, and enforceability of the contract. Firmsface the risk of a sponsor withdrawing from the agreement, or pressuring the firm tosell the product at a price lower than agreed on (e.g., during a humanitarian crisis).The sponsor may also face risks that result from difficulties in anticipating demandfor the product or in structuring the contract (compensation, timeframe, qualityevaluation, and so on).

5.5. Rewards and Prizes

Financial rewards or prizes for technology development are another mechanism thatcan be used to encourage private investment in agricultural R&D. Rewards andprizes are discussed in detail by Masters (2003) and Kramer and Zwane (2005). Inessence, they argue that prizes can be awarded for pro-poor innovations (e.g.,improved crop varieties), and that innovators should be paid in proportion to thesocial returns of their technologies, as determined by third-party assessments offarmer adoption rates.Rewards, prizes, and advance commitments have one key element in common:

They are all designed to elicit supply responses to demand. In other words, thesemechanisms attempt to create a market (typically through donor or public financing)where one might not otherwise exist. However, the social welfare impacts of thesevarious mechanisms have yet to be evaluated empirically. Wright (1983) providesone of the earliest theoretical comparisons of the social welfare properties of patents,prizes, and direct contracting for research services in the presence of asymmetricalinformation. Theoretical findings suggest that the best incentive scheme depends onthe appropriability of knowledge, the size of the deadweight losses, and the effects ofthe common pool problem.

6. SETTING A RESEARCH AGENDA FOR PRO-POOR PRIVATE R&D

Several key findings emerge from the previous discussion. First, few empiricallyconclusive relationships exist between the institutional and organizational mechan-isms described above, on the one hand, and private R&D investment in developing-country agriculture, on the other (Table 5). Second, empirical evidence on theserelationships is even scarcer with respect to private investment in crops, traits, andtechnologies of specific relevance to smallholders and other vulnerable social groupsin developing countries. Third, few organizations or countries have taken the



TABLE 5. Push and Pull Mechanisms for Stimulating Private R&D Investment

Mechanism Type Examples

Hypothesized impact

on private R&D

Public research Push Support for basic

scientific research

Inconclusive: Positive if

complementary; negative if

substitutive (crowding out)

Tax policies Push Tax credits, tax

holidays

Positive with lagged effect:

Small initially, but

increasing over time

R&D subsidies Push Competitive grants Inconclusive: Positive if

implemented under

supportive market

conditions

Technology

commercialization

programs

Push CRADAs Positive: Provides incentives

to move public research

into commercial use

Regulatory systems

improvement

Push Testing and

certification

Inconclusive: Positive if

efficient and transparent;

negative if overtly stringent

and costly

Research parks and

zones

Push Provision of land and

infrastructure near

universities

Positive: Typically help

investors to overcome

major entry barriers

Public–private

partnerships

Push Public seed

development,

private seed

distribution

Inconclusive: Successful where

costs and risks can be

managed, and where

differences in

organizational cultures can

be overcome

Third-party

brokering

Push Nonprofit

organizations like

the African

Agricultural

Technology

Foundation

Inconclusive: Positive if the

costs and risks associated

with transferring

technologies and tools

between the private and

public sectors can be

reduced

Strengthening

innovative

capacity

Push Organizational reforms

to incentivize inter-

disciplinary, inter-

organizational

collaboration

Positive: Helps create new

routines, practices, and

behaviors in support of

innovation

R&D market and

size

Pull Combining national

markets to form

larger regional

markets

Positive; helps create

economies of scale in

R&D, and larger demand

for end-products

Intellectual property

rights

Pull Patents, plant breeders’

rights, trademarks,

trade secrets

Inconclusive: impact depends

on the nature of the IPR

mechanism and the

presence of supporting

institutions



initiative to design or experiment with these incentive mechanisms in developingcountries. Fourth, of the few incentive mechanisms that have been implemented(e.g., competitive grants, public–private partnerships, and third-party brokering),few have been subjected to extensive monitoring, evaluation, or impact assessment.Theory suggests that many of these incentive mechanisms can promote private

investment in agricultural R&D provided that the key elements of an enablingenvironment are in operation. These elements include effective regulatory regimesand enforcement procedures to govern IPR, biosafety systems, tax exemptions,subsidy programs, and international trade regimes; physical and communicationsinfrastructure to accelerate the flow of information and knowledge amongresearchers; privatization of state-owned input-supply firms that crowd out privateinvestment; and harmonization of regional and international regulations to createlarger market opportunities.With a combination of the right elements for an enabling environment and the

right incentive mechanisms, the question then becomes one of how the private sectorresponds in terms of investing in agricultural R&D. Further, what types of crops,traits, and technologies does the private sector invest in, and what types oftechnology products and beneficial spillovers do these investments generate? Moreempirical evidence can assist policymakers in designing policies that place pro-pooragricultural R&D at the forefront of national science and technology agendas.In summary, continuous investment in agricultural R&D is critical to the

production of new technologies to enhance agricultural productivity and reducepoverty in many developing countries. The potential of the private sector has yet tobe realized, particularly with respect to the production of technologies that areexplicitly relevant to small-scale, resource-poor farmers and other vulnerable socialgroups. Private investment in agricultural R&D remains low in developing countries

TABLE 5. Continued

Mechanism Type Examples

Hypothesized impact

on private R&D

Trade liberalization Pull Lifting of trade

embargoes

Inconclusive: Firms and

countries may lose market

share in some areas but

gain it elsewhere

Advance purchase

commitments

Pull Predetermined

purchase promises

Inconclusive: depends on the

presence of enforcement

institutions; it is difficult to

predict future costs and

demand

Rewards and prizes Pull Financial prizes for

research discoveries

Inconclusive: depends on the

appropriability of

knowledge, size of

deadweight losses, and

effect of common pool

problems

Note. R&D5Research and development; CRADAS5Cooperative Research and Development Agree-

ments.



and persistently overlooks the crops, traits, and technologies that are vital tolivelihoods of the poor.Although there are many market and institutional factors that explain the low

rates of private investment, a number of incentive mechanisms would stimulateprivate investment. Push and pull mechanisms that stimulate both the demand forand supply of private R&D—if carefully designed, adequately funded, andpolitically backed—could generate desirable stimulus effects. However, whatremains to be seen is which measures are most effective and under whichcircumstances. Further research is needed to shed new light on these incentivemechanisms and their impact on private investment in pro-poor agricultural R&D.

ACKNOWLEDGMENTS

The authors thank Martha Negash, Wondimsiamregn Mekasha, and EteneshYitna for their technical support. Any and all errors are the sole responsibility of theauthors.

REFERENCES

Adato, M., & Meinzen-Dick, R. (2007). Introduction: Evolving concerns in the study ofimpact. In M. Adato & R. Meinzen-Dick (Eds.), Agricultural research, livelihoods, andpoverty (pp. 1–19). Baltimore, MD: Johns Hopkins University Press.

Alfranca, O., & Huffman, E.W. (2001). Impact of institutions and public research on privateagricultural research. Agricultural Economics, 25, 191–198.

Alfranca, O., & Huffman, E.W. (2003). Aggregate private R&D investments in agriculture:The role of incentives, public policies, and institutions. Economic Development andCultural Change, 52, 1–21.

Alston, J.M., & Venner, R.J. (2000). The effects of the U.S. Plant Variety Protection Act onwheat genetic improvement (Environment and Production Technology Division DiscussionPaper No. 62). Washington, DC: International Food Policy Research Institute.

Anderson, J., Pardey, P., & Roseboom, J. (1994). Sustaining growth in agriculture:A quantitative review of agricultural research investments. Agricultural Economics, 10,107–123.

Appold, S.J. (2004). Research parks and the location of industrial research laboratories: Ananalysis of the effectiveness of a policy intervention. Research Policy, 33, 225–243.

Arthur, W.B. (1988). Self-reinforcing mechanisms in economics. In P.W. Anderson,K.J. Arrow, & D. Pines (Eds.), The economy as an evolving complex system (pp. 9–32).Redwood City, CA: Addison-Wesley.

Agricultural Science and Technology Indicators (ASTI). (2005). ASTI database. RetrievedJanuary 26, 2005, from http://www.asti.cgiar.org/index.cfm

Binenbaum, E., Nottenburg, C., Pardey, P.G., & Zambrano, P. (2003). South-north trade,intellectual property jurisdictions, and freedom to operate in agricultural research on staplecrops. Economic Development and Cultural Change, 51, 309–335.

Binenbaum, E., Pardey, P.G., & Wright, B.D. (2001). Public–private research relationships:The Consultative Group on International Agricultural Research. American Journal ofAgricultural Economics, 83, 748–753.

Binenbaum, E., Pardey, P.G., Zambrano, P., Nottenburg, C., & Wright, B.D. (2000).South-north trade, intellectual property jurisdictions, and freedom to operate inagricultural research on staple crops (Environment and Production Technology DivisionDiscussion Paper No. 70). Washington, DC: International Food Policy ResearchInstitute.

Bloom, N., Griffith, R., & Van Reenen, J. (2002). Do R&D tax credits work? Evidence from apanel of countries 1979–1997. Journal of Public Economics, 85, 1–31.



Brennan, M., Pray, C., & Courtmanche, A. (2000). Impact of industry concentration oninnovation in the U.S. plant biotech industry. In W. Lesser (Ed.), Transitions in agbiotech:Economics of strategy and policy, the Proceedings of the Northeast-165 Conference(pp. 153–174). Storrs, CT/Amherst, MA: University of Connecticut, Food MarketingPolicy Center; Department of Agricultural and Resource Economics; and University ofMassachusetts, Amherst, Department of Resource Economics.

Butler, L., & Marion, B. (1985). The impacts of patent protection on the U.S. seed industryand public plant breeding (North Central Region Research Publication 304, North CentralProject 117, Monograph 16). Madison, WI: College of Agricultural and Life Sciences,University of Wisconsin, Research Division.

Byerlee, D. (1998). The search for a new paradigm for the development of nationalagricultural research systems. World Development, 26, 1049–1055.

Byerlee, D., & Fischer, K. (2002). Accessing modern science: Policy and institutional optionsfor agricultural biotechnology in developing countries. World Development, 30,931–948.

Caswell, M.F., Fuglie, K.O., & Klotz, C.A. (1994). Agricultural biotechnology: An economicperspective (Agricultural Economics Report No. 687). Washington, DC: U.S. Departmentof Agriculture Economic Research Service.

Chapman, J., Quemada, H., Kent, L., & Herman, M. (2003). Agricultural biotechnology inIndonesia: An assessment. Washington, DC/St. Louis, MO: Development Alternatives,Inc., and the Donald Danforth Plant Science Center.

Chataway, J. (2005). Introduction: Is it possible to create pro-poor agriculture-relatedbiotechnology? Journal of International Development, 17(5), 597–610.

Christensen, C.M., Anthony, S.D., & Roth, E.A. (2004). Seeing what’s next. Using thetheories of innovation to predict industry change. Boston: Harvard Business School Press.

Christensen, C.M., & Raynor, M.E. (2003). The innovator’s solution. Creating and sustainingsuccessful growth. Cambridge, MA: Harvard Business School Press.

Clark, N. (2002). Innovation systems, institutional change and the new knowledge market:Implications for third world agricultural development. Economics of Innovation and NewTechnology, 11(4–5), 353–368.

Cohen, J.I. (2005). Poor nations turn to publicly developed GM crops. Nature Biotechnology,23, 27–33.

Cohen, J.I., & Paarlberg, R. (2002). Explaining restricted approval and availability of GMcrops in developing countries. Ag Biotech Net, 4, 1–6.

Dalrymple, D. (2006). Impure public goods and agricultural research: Toward a blend oftheory and practice. Quarterly Journal of International Agriculture, 45, 71–89.

David, P.A., Hall, B., & Toole, A.A. (1999). Is public R&D a complement or substitute forprivate R&D? A review of the econometric evidence. Research Policy, 29, 497–529.

Davis, K., Ekboir, J., Mekasha, W., Ochieng, C., Spielman, D.J., & Zerfu, E. (2007).Strengthening agricultural education and training in Sub-Saharan Africa from aninnovation systems perspective: Case studies of Ethiopia and Mozambique (InternationalFood Policy Research Institute Discussion Paper No. 736). Washington, DC: InternationalFood Policy Research Institute.

Day-Rubenstein, K., & Fuglie, K.O. (2000). The CRADA model for public–private researchand technology transfer in agriculture. In K.O. Fuglie & D.E. Schimmelpfennig (Eds.),Public–private collaboration in agricultural research: New institutional arrangements andeconomic implications. Ames, IA: Iowa State University Press.

Dosi, G. (1988). Institutions and markets in a dynamic world. The Manchester School, 56,119–146.

Dosi, G., Freeman, C., Nelson, R., Silverberg, G., & Soete, L. (Eds.). (1988). Technical changeand economic theory. London: Pinter.

Edquist, C. (Ed.). (1997). Systems of innovation approaches: Technologies, institutions andorganizations. London: Pinter.

Ekboir, J.M. (2004). Evaluacion nacional del subprograma de investigacion y transferencia detecnologıa de la Alianza para el Campo, Mexico [National evaluation of the subprogram ofresearch and technology transfer, Alianza para el Campo] (FAO consultancy report).Rome: Food and Agriculture Organization.



Evenson, R.E. (1974). International diffusion of agrarian technology. Journal of EconomicHistory, 34, 51–73.

Evenson, R.E., & Kislev, Y. (1975). Agricultural Research and Productivity. New Haven, CT:Yale University Press.

Falconi, C. (1994). Public and private sector interactions in agricultural research: The case ofColombia. The Hague, the Netherlands: International Service for National AgriculturalResearch.

Freeman, C. (1987). Technology policy and economic performance: Lessons from Japan.London: Pinter.

Freeman, C. (1988). Japan: A new national system of innovation. In G. Dosi, C. Freeman,R. Nelson, G. Silverberg, & L. Soete (Eds.), Technical change and economic theory.London: Pinter.

Fuglie, K., Ballenger, N., Day, K., Klotz, C., Ollinger, M., Reilly, J., et al. (1996). Agriculturalresearch and development: Public and private investments under alternative markets andinstitutions (Agricultural Economics Report No. 735). Washington, DC: U.S. Departmentof Agriculture Economic Research Service.

Fuglie, K.O., & Walker, T.S. (2001). Economic incentives and resource allocation in U.S.public and private plant breeding. Journal of Agricultural and Applied Economics, 33,459–473.

Fulton, M., & Giannakas, K. (2001). Agricultural biotechnology and industry structure.AgBioForum, 4, 137–151.

Gerpacio, R.V. (2003). The roles of public sector versus private sector in R&D andtechnology generation: The case of maize in Asia. Agricultural Economics, 29,319–330.

Gill, G., & Carney, D. (1999). Competitive agricultural technology funds in developingcountries. Natural Resources Perspective 41. London: Overseas Development Institute.

Gisselquist, D., & van der Meer, C. (2001). Regulations for seed and fertilizer markets:A good policy guide for policy makers (Rural Development Working Paper No. 22817).Washington, DC: World Bank.

Griliches, Z. (1957). Hybrid corn: An exploration to the economics of technological change.Econometrica, 25, 501–522.

Griliches, Z., Nordhaus, W.D., & Scherer, F.M. (1989). Patents, recent trends and puzzles. InM.N. Baily & C. Wilson (Eds.), Brookings Papers on Economic Activity, Microeconomics(pp. 291–328). Washington, DC: The Brookings Institution.

Gruere, G., Giuliani, A., & Smale, M. (2006). Marketing underutilized plant species for thebenefit of the poor: A conceptual framework (Environment and Production TechnologyDivision Discussion Paper No. 154). Washington, DC: International Food Policy ResearchInstitute.

Hall, A., Sivamohan, M.V., Clark, K.N.G., Taylor, S., & Bockett, G. (1998). Institutionaldevelopments in Indian agricultural research systems: Emerging patterns of public andprivate sector activities. Science, Technology and Development, 16, 51–76.

Hall, A., Sulaiman, R., Clark, N., Sivamohan, M.V.K., & Yoganand, B. (2002). Public-privatesector interaction in the Indian agricultural research system: An innovation systemsperspective on institutional reform. In D. Byerlee & R. Echeverrıa (Eds), Agriculturalresearch policy in an era of privatization (pp. 155–176). Oxon, UK: CABI.

Hall, B., & van Reenen, J. (2000). How effective are fiscal incentives for R&D? A review of theevidence. Research Policy, 29, 449–469.

Hayenga, M., & Kalaitzandonakes, N. (1999, June). Structure and coordination systemchanges in the U.S. biotech seed and value-added grain market. Paper presented at theInternational Food and Agribusiness Management Association World Food andAgribusiness Congress, Florence, Italy.

Hazell, P., & Haddad, L. (2001). Agricultural research and poverty reduction (Food,Agriculture, and the Environment Discussion Paper No. 34). Washington, DC:International Food Policy Research Institute.

James, C. (1997). Progress in Public–private sector partnerships in international agriculturalresearch and development (ISAAA Brief No. 4-1997). Ithaca, NY: International Service forthe Acquisition of Agri-biotech Applications.



James, C. (2006). Global status of commercialized biotech/GM crops: 2006. (ISAAA BriefNo. 35, Executive Summary). Ithaca, NY: International Service for the Acquisition ofAgri-biotech Applications.

Kanwar, S., & Evenson, R. (2003). Does intellectual property protection spur technologicalchange? Oxford Economic Papers, 55, 235–264.

Kent, L. (2004). What’s the holdup? Addressing constraints to the use of plant biotechnologyin developing countries. AgBioForum, 7, 63–69.

King, J.L. (2001). Concentration and technology in agricultural input industries (AgricultureInformation Bulletin No. 763). Washington, DC: U.S. Department of AgricultureEconomic Research Service.

Kramer, M., & Zwane, A.P. (2005). Encouraging private sector research in tropicalagriculture. World Development, 33, 87–105.

Lele, U., Lesser, W., & Horstkotte-Wesseler, G. (2000). Intellectual property rights inagriculture. Washington, DC: World Bank.

Lerner, J. (1999). The government as venture capitalist: The long-run impact of the SBIRProgram. Journal of Business, 72, 285–318.

Link, A.N. (2002). Private-sector and public-sector strategies to encouragetechnological alliances. In J. de la Mothe & A.N. Link (Eds.), Networks, alliances andpartnerships in the innovation process (pp. 7–28). Boston, MA: Kluwer AcademicPublishers.

Lundvall, B. (1985). Product innovation and user-producer interaction. Aalborg, Denmark:Aalborg University Press.

Mani, S. (2001, September). Role of government in promoting innovation: An internationalcomparative study. Paper presented at the Future of Innovation Studies Conference,Eindhoven University of Technology, The Netherlands.

Masters, W.A. (2003). Research prizes: A mechanism to reward agricultural innovation inlow-income regions. AgBioForum, 6, 71–74.

Meinzen-Dick, R., Adato, M., Haddad, L., & Hazell, P. (2003). Science and poverty:An interdisciplinary assessment of the impact of agricultural research (IFPRI Food PolicyReport). Washington, DC: International Food Policy Research Institute.

Morris, M.L. (1998). Maize in the developing world: Waiting for a green revolution. InM.L. Morris (Ed.), Maize seed industries in developing countries (pp. 3–12). Boulder, CO:Lynne Rienner.

Morris, M.L. (2002). Impacts of international maize breeding research in developingcountries: 1966–1998. Mexico City: International Maize and Wheat Improvement Center.

Morris, M., Singh, R., & Pal, S. (1998). India’s maize seed industry in transition: Changingroles for the public and private sectors. Food Policy, 23, 55–71.

Narrod, C., & Fuglie, K. (2000). Private-sector investment in livestock breeding. Agribusiness,4, 457–470.

National Research Council (NRC). (2008). Lost crops of Africa. Volume III. Fruits.Washington, DC: National Academies of Science.

National Research Council. (2006). Lost crops of Africa. Volume II. Vegetables. Washington,DC: National Academies of Science.

National Research Council. (1996). Lost crops of Africa. Volume 1. Grains. Washington, DC:National Academies of Science.

Naylor, R.L., Falcon, W.P., Goodman, R.M., Jahn, M.M., Sengooba, T., Tefera, H., et al.(2004). Biotechnology in the developing world: A case for increased investments in orphancrops. Food Policy, 29, 15–44.

Ndii, D., & Byerlee, D. (2005). Realizing the potential for private-sector participation inagricultural research in Kenya. In C.G. Ndiritu, J.K. Lynam, & A.N. Mbabu (Eds.),Transformation of Agricultural Research Systems in Africa: Lessons from Kenya(pp. 339–360). East Lansing, MI: Michigan State University Press.

Nelson, R.R. (1988). National systems of innovation: Institutions supporting technical changein the United States. In G. Dosi, C. Freeman, R. Nelson, G. Silverberg, & L. Soete (Eds.),Technical change and economic theory (pp. 312–329). London: Pinter.

Nelson, R.R., & Winter, S.G. (1982). An evolutionary theory of economic change.Cambridge, MA: Belknap Press.



Nielson, C.P., Robinson, S., & Thierfelder, K. (2001). Genetically modified crops indeveloping countries. World Development, 29, 1307–1324.

Nottenburg, C., Pardey, P.G., & Wright, B.D. (2001). Addressing freedom-to-operatequestions for international agricultural R&D. In P.G. Pardey (Ed.), The future of food:Biotechnology markets and policies in an international setting (pp. 99–128). Washington,DC: International Food Policy Research Institute.

Organization for Economic Co-Operation and Development (OECD). (1994). Biotechnologyand sustainable development: Lessons from India (OECD working paper). Paris: Author.

Oehmke, J.F. (1999). Biotechnology R&D races, industry structure, and public and privatesector research orientation. AgBioForum, 4, 105–114.

Omamo, S.W., & Naseem, A. (2005). Agricultural science and technology policy forgrowth and poverty reduction (International Service for National Agricultural ResearchDivision Discussion Paper No. 3). Washington, DC: International Food Policy ResearchInstitute.

Padulosi, S., Hodgkin, T., Williams, J.T., & Haq, N. (2002). Underutilised crops: Trends,challenges and opportunities in the 21st century. In J. Engels, V.R. Rao, & M. Jackson(Eds.), Managing plant genetic diversity (pp. 322–338). Rome: International Plant GeneticResearch Institute.

Pardey, P.G., & Beintema, N.M. (2001). Slow magic: Agricultural R&D a century afterMendel (IFPRI Food Policy Report). Washington, DC: International Food PolicyResearch Institute.

Pardey, P.G., Beintema, N.M., Dehmer, S., & Wood, S. (2006). Agricultural research:A growing global divide? (IFPRI Food Policy Report). Washington, DC: InternationalFood Policy Research Institute.

Parker, D., Castillo, F., & Zilberman, D. (2001). Public–private sector linkages in research anddevelopment: The case of U.S. agriculture. American Journal of Agricultural Economics,83, 736–741.

Pingali, P.L., & Traxler, G. (2002). Changing locus of agricultural research: Will the poorbenefit from biotechnology and privatization trends? Food Policy, 27, 223–238.

Pray, C.E. (1992). Plant breeders’ rights legislation, enforcement and R&D: Lessons fordeveloping countries. In G. Peters & B. Stanton (Eds.), Sustainable agricultural development:The role of international cooperation (pp. 99–128). Proceedings of the Twenty-FirstInternational Conference of Agricultural Economists. Brookfield, VT: Dartmouth.

Pray, C.E. (2001). Public–private sector linkages in research and development: Biotechnologyand the seed industry in Brazil, China and India. American Journal of AgriculturalEconomics, 83, 742–747.

Pray, C.E., Bengali, P., & Ramaswami, B. (2004, July). Costs and benefits of biosafetyregulation in India: A preliminary assessment. Paper presented at the InternationalConsortium on Agricultural Biotechnology Research (ICABR) Eighth InternationalConference on Agricultural Biotechnology: International Trade and Domestic Production,July 8, Ravello, Italy.

Pray, C.E., Courtmanche, A., & Govindasamy, R. (2002, July). The importance of intellectualproperty rights in the international spread of private sector agricultural biotechnology.Paper presented at the International Consortium on Agricultural Biotechnology Research(ICABR) Sixth International Conference on Agricultural Biotechnologies: New Avenuesfor Production, Consumption and Technology Transfer, Ravello, Italy.

Pray, C.E., & Fuglie, K.O. (2001). Private investment in agricultural research andinternational technology transfer in Asia (Agricultural Economics Report 805).Washington, DC: U.S. Department of Agriculture Economic Research Service.

Pray, C.E., Fuglie, K.O., & Johnson, D.K.N. (2007). Private agricultural research. InR. Evenson & P. Pingali (Eds.), Handbook of agricultural economics (Vol. 3). Amsterdam:Elsevier.

Pray, C.E., & Naseem, A. (2003). The economics of agricultural biotechnology research (ESAWorking Paper No. 03-07). Rome: Food and Agriculture Organization of the UnitedNations.

Pray, C., Oehmke, J.F., & Naseem, A. (2005). Innovation and dynamic efficiency in plantbiotechnology: An introduction to the researchable issues. AgBioForum, 8, 52–63.



Pray, C., Ramaswami, B., & Kelley, T. (2001). The impact of economic reforms on R&D bythe Indian seed industry. Food Policy, 26, 87–598.

Pray, C.E., & Umali-Deininger, D. (1998). The private sector in agricultural research systems:Will it fill the gap? World Development, 26, 1127–1148.

Qaim, M., & Traxler, G. (2005). Roundup ready soybeans in Argentina: Farm level andaggregate welfare effects. Agricultural Economics, 32, 73–86.

Ramaswami, B., Pray, C.E., & Kelley, T. (2002). Dissemination of private hybrids and cropyields in the semi-arid tropics of India. Indian Journal of Agricultural Economics, 57,39–51.

Rukuni, M., Blackie, M.J., & Eicher, C.K. (1998). Crafting smallholder-driven agriculturalresearch systems in Southern Africa. World Development, 26, 1073–1087.

Sandler, T. (2003). Assessing the optimal provision of public goods: In search of the HolyGrail. In I. Kaul, P. Cao, K. Goulven, & R.U. Mendoza (Eds.), Providing global publicgoods: Managing globalization (pp. 131–151). New York: Oxford University Press.

Scherer, F.M. (1982a). Demand-pull and technological innovation: Schmookler revisited.Journal of Industrial Economics, 30, 225–238.

Scherer, F.M. (1982b). Inter-industry technology flows and productivity growth. Review ofEconomics and Statistics, 64, 627–634.

Schmookler, J. (1966). Invention and economic growth. Cambridge, MA: Harvard UniversityPress.

Smale, M., Zambrano, P., Falck-Zepeda, J., & Gruere, G. (2006). Parables: Appliedeconomics literature about the impact of genetically engineered crop varieties in developingeconomies (Environment and Production Technology Division Discussion Paper No. 158).Washington, DC: International Food Policy Research Institute.

Spielman, D.J. (2006). A critique of innovation systems perspectives on agricultural researchin developing countries. Innovation Strategy Today, 2, 25–38.

Spielman, D.J. (2007). Pro-poor agricultural biotechnology: Can the international researchsystem deliver the goods? Food Policy, 32, 189–204.

Spielman, D.J., Cohen, J.I., & Zambrano, P. (2006). Will agbiotech applicationsreach marginalized farmers? Evidence from developing countries. AgBioForum, 9,23–30.

Spielman, D.J., Hartwich, F., & von Grebmer, K. (2007). Sharing science, building bridges,and enhancing impact: Public–private partnerships in the CGIAR (International FoodPolicy Research Institute Discussion Paper No. 708). Washington, DC: International FoodPolicy Research Institute.

Spielman, D.J., & von Grebmer, K. (2006). Public–private partnerships in internationalagricultural research. Journal of Technology Transfer, 31, 291–300.

Srinivasan, C., & Thirtle, C. (2000). Understanding the emergence of terminator technologies.Journal of International Development, 12, 1147–1158.

Spillane, C. (2002). Agricultural biotechnology and developing countries: Proprietaryknowledge and diffusion of benefits. In T.M. Swanson (Eds.), Biotechnology, agricultureand the developing world: The distributional implications of technological change(pp. 67–134). Northampton: Edward Elgar Publishing.

Tassey, G. (2007). Tax incentives for innovation: Time to restructure the R&E tax credit.Journal of Technology Transfer, 32, 605–615.

Tripp, R. (2001). Can biotechnology reach the poor? The adequacy of information and seeddelivery. Food Policy, 26, 249–264.

Tripp, R., & Louwaars, N. (1997). Seed regulation: Choices on the road to reform. FoodPolicy, 22, 433–446.

Tripp, R., & Pal, S. (2001). The private delivery of public crop varieties: Rice in AndhraPradesh. World Development, 29, 103–117.

World Bank. (1995). Bangladesh, India and Pakistan—seed projects. Operations evaluationdepartment project evaluation. Washington, DC: Author.

World Bank. (1996). The seed industry in South Asia. Precis and briefs. Washington, DC:Author.

World Bank. (2004). The CGIAR at 31: A meta-evaluation of the consultative group oninternational agricultural research. Washington, DC: Author.



World Bank. (2006). Enhancing agricultural innovation: How to go beyond the strengtheningof research systems. Washington, DC: Author.

Wright, B.D. (1983). The economics of invention incentives: Patents, prizes, and researchcontracts. American Economic Review, 73, 691–707.

Zhang, C. (2004). Measuring the impact of biosafety regulations on urban consumeracceptance of genetically modified food in China. Unpublished Master’s Thesis, RutgersUniversity, Rutgers, NJ.

Anwar Naseem is an assistant professor of Agricultural Economics at McGill University. He

holds a PhD in Agricultural Economics from Michigan State University. His current research

interests include economics of agricultural science policy, impact and regulation of agricultural

biotechnology, intellectual property rights, and R&D-based models of growth.

David J. Spielman is a research fellow with the International Food Policy Research Institute

(IFPRI), based in Addis Ababa, Ethiopia. His research agenda covers a range of topics including

agricultural science, technology and innovation policy; markets and systems for development and

deployment of improved seed; and community-driven rural development programs. David received

a PhD in Economics from American University in 2003.

Steven Were Omamo is Deputy Director and Chief of Food Security Policy and Markets in the

Policy, Planning and Strategy Division of the UN World Food Programme (WFP). He leads

policy analysis and program support for WFP’s activities in climate change adaptation, food

security, and disaster risk reduction. He holds a PhD from Stanford University.



private-sector investment in r&d: a review of policy options to promote its growth in...

Documents