PRIVATE INVESTMENT IN AGRICULTURAL RESEARCH AND INTERNATIONAL TECHNOLOGY TRANSFER IN ASIA

Abstract

This study addresses the questions of future sources of technology for increasing food and agricultural production by considering the situation in Asia. This region of the world is particularly appropriate for studying these questions because of the dynamic changes in population and incomes. How much private research is there and what is it producing? Will the private sector compensate for declining public agricultural research investments in Asia? What can governments do to stimulate private research and protect farmers from harmful or defective technology? Agribusiness firm's R&D investments were evaluated in selected developing countries during 1996 and 1998 and compared with data from a similar study conducted in the mid-1980s. The largest amount of private research was in India where investment was about $55 million per year in the mid-1990s, followed by Thailand, Malaysia, and China. China's private R&D spending represents less than one one-hundredth of 1 percent of agricultural gross domestic product. In contrast, in Thailand and Malaysia, firms spent about 0.1 percent. From the mid-1980s to the mid-1990s, private sector R&D grew in real terms in the countries in our sample. However, at this rate, private research will not fill the gap needed to support rapid growth in demand for agricultural products. Foreign firms made an important contribution to private research in all of these countries. The most important policy that helped induce this growth was liberalization of industrial policy that allowed private and foreign firms to operate and expand in agricultural input industries. A second important policy was investments in public research. Patents and tax incentives seem to have had little effect so far, but could be important in the future.