Knowledge for Development

Feature articles

Investing in Agricultural Innovation: A Market Economy Perspective (Part 1)

In the first lead article, Roseboom explores how the adoption of a market economy perspective is affecting/ redefining the role of government in agricultural innovation. He focuses on two key questions that policymakers investing in agricultural innovation are struggling with in a market economy, namely: (i) what should be the role of government and how much should be invested in agricultural research, extension and other innovation stimulating measures and; what is the optimal level of public and private investment? According to Roseboom, in an ‘ideal’ market economy, the business enterprise sector takes care of its own innovation activities and the government only plays an enabling and stimulating role by: (i) supporting education and basic research; (ii) creating the right incentives for the private sector to invest in innovation e.g. IPR and anti-trust policies and regulations; and (iii) coordinating the country’s innovation capacity strategically. He suggests that market failure should be eliminated or at least reduced and the responsibility for agricultural innovation handed over to the economic actors in agriculture but notes that this process does not happen overnight.


The optimal level of investment in agricultural innovation (Part 2)

Roseboom notes that although benchmarking is the most common way of evaluating the level of government investment in agricultural innovation, it is a rather poor tool because it lacks the theoretical underpinning and tends to reinforce the status quo. For example, many economists have argued that there is serious underinvestment in agricultural innovation based on ex post rate of return studies of agricultural research and extension projects. He suggests that using a three step approach based on a standard cost-benefit analysis technique to calculate the expected rate or return (ERR), provides the theoretical answer for establishing the optimal level of investment in agricultural innovation. However, such a rational economic approach is not common practice for investing in agricultural innovation projects either in developing or developed countries. The size of the optimal investment in agricultural innovation and as such the overall productivity depends on the country’s level of economic development, its agricultural innovation capacity and various structural factors such as the level of technological capacity and risk and uncertainty.


Optimizing Public and Private Investments in Agricultural Innovations: Policy Implications (Part 3)

In the final lead article, Roseboom explores the policy implications of the various options for optimizing public and private sector investments in agricultural innovation. In a market economy, the responsibility for agricultural innovation lies principally with the private sector and the public role is very limited. It is only when markets fail that the government should step in; either by trying to resolve the failure or by assuming responsibility for certain agricultural innovation activities. He opines that it is important to understand the cause and depth of the market failure in terms of horizontal and vertical spill over losses to be able to resolve or moderate it. These losses seriously undermine the expected profitability of private investment in agricultural innovation in general and hence have a negative impact on the economically optimal volume of investments. He recommends differentiated support strategies and developments in public management namely; performance-based budgeting, competitive funding schemes and greater involvement of the ultimate beneficiaries for ensuring that available public resources are invested in the most promising agricultural innovation opportunities.


Does research reduce poverty? Assessing the welfare impacts of policy-oriented research in agriculture

This paper surveys the literature and identifies different ways of assessing the impact of ‘policy-oriented’ research. It then takes the available literature on agriculture as a specific focus of study. The author examine the different types of ‘policy-oriented’ research; the literature on the ‘theories of change‘ for policy research in international development; methodologies for analysing the impact of policy-oriented research; the relevant agriculture literature and outlines the types of indicators that can be used for impact assessment of research with examples.More than ever before, every dollar spent on development research will have to count towards sustainable poverty reduction. However, the understanding of the impacts of development research on policy change and on poverty is weak at best, with agriculture being no different. The area of research impact is not a new area of enquiry but an emergent one.(Reference: Edoardo Masset, Rajendra Mulmi and Andy Sumner; IDS Working Papers 360; 2011)