The Demand for Agricultural Research: A Colombian Illustration

Abstract

The generation of new technology has come to be viewed as an economic activity to which scarce resources can be devoted, and for which measurable output can be defined (Schultz 1970). Society, either individually or collectively, makes conscious investment decisions to allocate resources to research activities with the expectation that the present value of some future income streams resulting from the technological advances will exceed the cost of their generation. This leads naturally to the concept of efficiency of resource use and the evaluation of whether the research expenditures constituted a socially profitable use of resources. Griliches, Peterson, Ayer and Schuh, and Duncan provide well-documented examples of the analysis of the returns to investment in agricultural research. Evenson (1975, 1976, 1977) recently has extended these studies to encompass the returns to the international diffusion of innovations. In addition to the efficiency criterion, economists increasingly have focused attention on the distributional impact of technological change. Typically a comparative static Marshallian framework is used to estimate the gross social benefits accruing to producers and consumers (e.g., Akino and Hayami). This is accomplished by comparing the producer and consumer surplus with and without the technological change, which is captured by a displacement of the product supply curve. The procedures for measurement of the relevant areas, questioned by Scobie, have been clarified recently (Jarrett and Lindner, Lindner and Jarrett, Sarhangi et al.). Other researchers have considered the impact of on functional income shares (Ayer and Schuh, Wallace and Hoover). More recently, Scobie and Posada (1977, 1978) examined the impact of research-induced benefits and costs on the distribution of household income at the national level. The increased attention to distributional impacts reflects an important step in the development of a more complete analysis of technological change, one in which the economic and political forces leading to the generation of new technology are themselves related to and explained by matters of efficiency and equity. In short, a conceptual framework is sought in which technological change becomes a truly endogenous element. Hayami and Ruttan have offered relative factor prices as an engine governing the force and direcion of technological change, and Ruttan (1973, p. 46) extends the induced perspective to include the process of institutional innovation (see also Ruttan 1978). The demand for publicly financed research is explained by Guttman in terms of political interest groups, i.e., the beneficiaries of the research. De Janvry (1977) has developed an explicit model of generation of new technology in which he identifies the determinants of the supply of and demand for technological change, again harpening the focus on the sociopolitical interdependencies. While being a relatively complete statement of the dialectical process which generates technological and institutional change, enormous empirical challenges remain. De Janvry's attempt to construct a social payoff matrix for Chile or the work of Evenson (1977) in constructing measures of research output serve to caution the ambitious. However, economists must venture beyond the mechanical calculation of internal rates of return to