Benefits of Agricultural R&D International Spillovers: The case of aquaculture

Abstract

International spillovers from research and development (R&D) arise when technology developed in one geopolitical region is adopted by another region, resulting in a divergence between social and private benefits from the technology. Applying this concept to aquacultural R&D, study results based on a partial equilibrium model of the global fish market suggest the magnitude of spillovers depends crucially on where the R&D occurs. When the R&D occurs in the developing world and assuming the cost savings to the developed world from the technology transfer equals half the cost savings experienced by the developing world, spillover effects are shown to be negligible. A basic reason is that developing countries account for over 90% of the global production of farmed fish. Consequently, technology “leakages” to the developed world have a modest effect on the global supply of farmed fish, and thus on the price and welfare effects of the technology transfer. In contradistinction, spillovers associated with technology leakages in the other direction, namely from the developed to the developing world, are shown to be both large and economically important. When spillover effects are taken into account the global annual gain ($4.9 billion) from a 2.5% import tax used to fund aquacultural R&D in the developed world is estimated to be 4.9 times larger than the domestic annual gain ($1.0 billion).