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A Comparison Of Procedures For Estimating Returns To Research Using Production Functions

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  • Davis, Jeffrey S.

Abstract

The production function approach has been one of the two main ex-post procedures used to estimate the rate of return to agricultural research. A critical part of estimating the marginal internal rate of return (MIRR) is the procedure adopted to spread the benefits of research through time. Past studies using this approach have given only brief consideration to this computational procedure. The objective in this study was to review the different computational procedures used and, then, using cross-section production function estimates for U.S. agriculture, determine whether the MIRR estimates are sensitive to the computational procedure used. The results from this comparison indicate a large range in the estimates. The implication, then, is that careful consideration should be given to the choice of computational procedure, both when undertaking such a study and when comparing the results of different studies.

Suggested Citation

  • Davis, Jeffrey S., 1981. "A Comparison Of Procedures For Estimating Returns To Research Using Production Functions," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 25(1), pages 1-13, April.
    • Handle: RePEc:ags:ajaeau:22632
    DOI: 10.22004/ag.econ.22632
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    References listed on IDEAS

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    1. Gideon Fishelson, 1971. "Returns to Human and Research Capital in the Non-South Agricultural Sector of the United States, 1949–1964," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(1), pages 129-131.
    2. Robert Evenson, 1967. "The Contribution of Agricultural Research to Production," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 49(5), pages 1415-1425.
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    Cited by:

    1. Thirtle, Colin, 1986. "The Production Function Approach to the Relationship Between Productivity Growth and R & D," Manchester Working Papers in Agricultural Economics 232791, University of Manchester, School of Economics, Agricultural Economics Department.
    2. Thirtle, C. & Bottomley, P., 1988. "Explaining Total Factor Productivity Change: Returns to R & D in U.K. Agricultural Research," Manchester Working Papers in Agricultural Economics 232809, University of Manchester, School of Economics, Agricultural Economics Department.
    3. Michael Harris & Alan Lloyd, 1991. "The Returns to Agricultural Research and the Underinvestment Hypothesis ‐ A Survey," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 24(3), pages 16-27, July.
    4. Colin Thirtle, 1999. "Productivity and the Returns to Levy‐Funded R&D for Sugar Production in the Eastern Counties of England," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 450-467, September.
    5. Jayasuriya, Rohan T., 2003. "Economic assessment of technological change and land degradation in agriculture: application to the Sri Lanka tea sector," Agricultural Systems, Elsevier, vol. 78(3), pages 405-423, December.
    6. Seldon, Barry J., 1987. "Economic Evaluation of Forestry Research: Synthesis and Methodology," Evaluating Agricultural Research and Productivity, Proceedings of a Workshop, Atlanta, Georgia, January 29-30, 1987, Miscellaneous Publication 52 50027, University of Minnesota, Agricultural Experiment Station.
    7. Davis, Jeffrey S., 1981. "The Relationship Between the Economic Surplus and Production Function Approaches for Estimating Ex-Post Returns to Agricultural Research," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 49(02), pages 1-11, August.
    8. Makki, Shiva S. & Thraen, Cameron S. & Tweeten, Luther G., 1999. "Returns to American Agricultural Research: Results from a Cointegration Model," Journal of Policy Modeling, Elsevier, vol. 21(2), pages 185-211, March.
    9. Yuen Ping Ho & Poh Kam Wong & Mun Heng Toh, 2009. "The Impact Of R&D On The Singapore Economy: An Empirical Evaluation," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 54(01), pages 1-20.

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