1. Investment in Agricultural R&D: The Changing Global Landscape
Session on Efficiency in Global Funding of Agricultural R&D
21st ICABR Annual Conference
Berkeley, CA, June May 30–June 2, 2017
Investment in Agricultural R&D: The Changing Global Landscape
Julian M. Alston
University of California, Davis
Philip G. Pardey
University of Minnesota
As the 21st century unfolds the old order of national investments in food and agricultural R&D are changing in ways that may have profound implications for agricultural innovation worldwide. The policy (including intellectual property) landscapes for food and agricultural R&D are also changing, in some respects substantially so, with consequences for the innovation incentives and investments in science for food and agriculture in general and the plant biosciences in particular. Public investments in food and agricultural R&D in rapidly-developing, middle-income countries are on the ascendancy, now eclipsing investments in the rich countries. The private- versus public-sector roles are also changing, but with large differences among countries in the pace and nature of these changes. This address will present and interpret new evidence on these global R&D investment trends, with an eye to their innovation, agricultural productivity and food security implications in the decades ahead.

2. Sources
Pardey, P.G., C. Chan-Kang, S.P Dehmer and J.M. Beddow “Agricultural R&D is on the Move.” Nature 15 (537): 301–303.
Alston, J.M. and P.G. Pardey “Agriculture in the Global Economy” Journal of Economic Perspectives 28(1): 121–146.
Pardey, P.G., J.M. Alston and C. Chan-Kang. “Public Agricultural R&D over the Past Half Century: An Emerging New World Order.” Agricultural Economics 44(2013): 103–113.
Nature, September 2016

3. Acknowledgment
We ourselves do not put enough emphasis on the value of data and data collection in our training of graduate students and in the reward structure of our profession. It is the preparation skill of the econometric chef that catches the professional eye, not the quality of the raw materials in the meal, or the effort that went into procuring them. Zvi Griliches (1994, p. 14).

4. What’s the story?
The contours of the global geography of agricultural & food R&D spending (agGERD) are changing dramatically
Shifts in the balance between private and public roles
Slowing rate of growth in public investments (agPERD)
Rising relative importance of private investments (agBERD)
especially in high-income countries
Shifts in the balance among countries
Rising relative importance of middle-income countries
Shrinking relative importance of high-income countries
Concern over low rates of investments in low income countries

5. Total Agricultural & Food R&D (agGERD) Worldwide, 1960–2011
$69.9 b
55.1%
44.9%
Log difference growth rate
Public ( ): 3.56%; Public ( ): 2.45%; Private ( ): 3.81%; Total Public+Private ( ): 2.99%
Source: Pardey, Chan-Kang, Beddow and Dehmer (2016, in process)

6. Agricultural & Food R&D (agGERD) by Income Class, 1980–2011

7. Relative Rates of Growth of agGERD, 1980–2011
AgBERD
AgPERD

8. Key Developments
Agricultural & food R&D spending is still highly concentrated geographically
But big changes in the relative roles (rank order) of the top 10 spending countries
Reversal of relative roles of the United States and China
Some populous and many poor countries remain comparatively under-represented

9. Spatial Concentration – Top 10 Country Share

10. Spatial Concentration – Top 10 Country Share

11. Spatial Concentration – Top 10 Country Share
China
USA
India
Japan
Brazil
Germany
France
Canada
Italy
Korea

12. Key Developments
Changes in global divides (scientific haves vs have nots)

13. Changing Global agGERD Divides
1980
2011
Source: Pardey, Chan-Kang, Beddow and Dehmer (2015, in process)

14. Spending Slices of the Global Ag & Food R&D Pie, 2011
Public
Private
Total
$38.8 bil.
$31.1 bil.
$69.9 bil.
Source: Pardey et al. (2016)

15. Key Developments
Changes in agricultural & food R&D spending can be partitioned into elements associated with
changes in agricultural and food production (AgGDP)
changes in the R&D intensity of production (ARI)
Agricultural Research Intensity: ARI = agGERD/agGDP
agGERD = ARI x agGDP
Δln(agGERD) = Δln(ARI) + Δln(agGDP)

16. Changing Economic Geography of agGDP, 1960–2011
Exclude EE&FSU
Source: Authors using UN (2015)

17. Changes in Research Intensity (ARI = agGERD/agGDP)
2.31
1.52
Source: Pardey, Chan-Kang, Beddow and Dehmer (2016, in process)

18. Decomposing the Growth in agGERD, 1980–2011
Δln(agGERD) = Δln(ARI) + Δln(agGDP)
Global growth in agGERD
7.4% associated with growth in ARI
92.6% associated with growth in agGDP
Rich Countries:
agGERD growth entirely attributable to growth in ARI
Large- and Middle-Income Countries:
agGERD growth largely associated with growth in agGDP
Middle income:
agGDP 83.3% of the growth
Low income:
agGDP growth accounts for 100% of the growth
Based on this decomposition, over the period , 7.4% of the growth in global agGERD is associated with an increase in the intensity of investment in food and agricultural R&D. Most (92.6%) of the global growth in agGERD is associated with the change in agGDP.
These estimates are for the world as a whole, but the relative importance of the two sources of R&D growth vary markedly from country-to-country and region-to-region. For example, among most of the rich countries (and for that group of countries as a whole), increases in agGERD spending were entirely attributable to increasing the intensity of R&D investment (given that for many of these countries, agGDP actually shrunk). In contrast, for the low- and middle-income groups, the increase in agGERD, was largely associated with an expanding agricultural economy, with agGDP growth accounting for all of the growth in the low-income countries and 83.8% in the middle-income countries.

19. agGERD vs GERD, 2011 27.5% Bubble size is agGDP/GDP
Bottom left is Somalia (agGDP share 53%, agGERD share 4%) Just to the right is Ginnea Bissau (44.1% and gerd share 4.2%)
Top big is Liberia agGDP share of 65%, agGERD share of 72.6%
Nigeria agGDP share 30.5%, agGERD share 29.5%
Large bottom red bubble is Myanmar agGERD share 6.2%, agGDP 34.3%
Source: Pardey et al. (2016, in process) and Dehmer et al. (2016, in process)

20. Shifts to a greater emphasis on private performance of R&D
Key Developments
Shifts to a greater emphasis on private performance of R&D
mainly concentrated in the rich countries (58.2%)
and faster growing middle-income countries (BIC 35.7%)

21. Rising Private Sector Participation
44.9%
33.6%
Source: Pardey et al. (2016).

22. Private Share of Total Agricultural & Food R&D
Growth rates were calculated using least squares method.
China private share in 2011 is 57.3%
India is 25.6%
Brazil is 44.7%

23. Private Agricultural and Food R&D in Rich Countries
Australia Shares in Food: 71.6%; Ag&Chemicals: 16.1%; Machinery: 12.3%
Australia Shares in 2011– Food: 68.4%; Ag&Chem: 27.6%; Machinery: 4.1%
Source: Pardey, Chan-Kang, Beddow and Dehmer (2015, in process)

24. Shifts in public performance of agricultural R&D
Key Developments
Shifts in public performance of agricultural R&D
Significant growth
Especially in today’s middle-income countries
But not everywhere….

25. Public Agricultural R&D Spending Worldwide, 1961 & 20116x
Source: Pardey et al. (2016).

26. US versus China Public Ag. R&D Spending, 1960–2011
In 1960 the United States invested $1.23 billion (2009 prices) in publicly performed R&D focused on food and agriculture, accounting for 20.2 percent of the world’s public investment at that time. Fast forward to 2013 and the U.S. total had grown to $4.23 billion (down to just 11.5 percent of the 2011 global share).

27. Shares in Global Public Agricultural R&D
For every dollar the U.S. invested in public agricultural R&D in 2011, Brazil, India and China invested $2.35, more than double the U.S. figure

28. Shares in Global Public Agricultural R&D
Sub Saharan Africa
Bottom 80 countries
Source: Pardey, Chan-Kang, Beddow and Dehmer (2016, in process)

29. Concluding Comments
Most of the world’s agGERD occurs in countries that produce most of the world’s agricultural production
But trends in R&D not fully in synch with trends in production
Low intensities in large, middle-income countries
High intensities in rich countries
…recent (public-sector) retreat from R&D
Challenge to maintain let alone increase agricultural productivity sustainably
Huge divide between the scientific haves and have nots
How do we get innovations into the hands of poor farmers?
Will the private sector save them?
On to the next…..

30. Thank You!

31. Global Public Agricultural R&D Pie, 1960 and 2009
58%
48%
5.5 billion (2005 PPP$)
20%
31%
2009
33.5 billion (2005 PPP$)

32. Intensity of Public Agricultural & Food R&D (agPERD), 1960 and 2011
Bubble is size of agGDP
Weighted average ARI for 2011 is 0.74 (used in graph)
Simple average ARI for 2011 is 1.43 (not used in graph)
Source: Pardey, Chan-Kang, Beddow and Dehmer (2016, in process)