Abstract
An attempt has been made to estimate the rate of return to agricultural research in the UK using an aggregate production function, in which research expenditure is related to changes in agricultural productivity. The average rate of return on research expenditure is estimated to have declined in real terms from 20–30 percent in 1966–1970 to 10–20 percent in 1976–1980. This compares with a required rate of return on investment in the nationalised industries of 5 percent and a projected real cost for public sector borrowing of 1 percent in 1975–1980. Projections for the period 1981–1990 suggest a further decline in the rate of return to 8–15 percent. The reasons for this decline may be threefold: (i) diminishing returns to research in toto, (ii) a failure to allocate resources to more profitable areas of research within the agricultural field, and (iii) a decrease in the efficiency with which research results are incorporated into new technology. However, in view of the considerable caveats surrounding the whole analysis, attempts to draw policy prescriptions must be treated with caution.
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