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Economic Cost and Returns from Research and Development: The Case of Chili in Bangladesh

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  • Hasan, Md. Kamrul
  • Banik, Bhagya Rani

Abstract

The study estimated the benefit and rate of returns to investment on chili research and development(R&D) in Bangladesh. The Economic Surplus Model with ex-post analysis was used to determine the returns to investment and their distribution between production and consumption. Several discounting techniques were also used to assess the efficiency of chili research. The adoption rate showed an increasing trend over the period. The yield of modern variety, BARI-Chilli-1, developed by the Bangladesh Agricultural Research Institute (BARI) was 72 percent higher than that of the local variety. Society received a net benefit of BDT 813.12 million (USD 10.42 million) from investment in chili R&D. The net present value and present value of research cost were estimated at BDT 289.14 million (USD 3.71 million) and BDT 78.49 million (USD 1.01 million), respectively. The internal rate of return and benefit cost ratio were estimated to be 55 percent and 5.48, respectively. This indicates that investment in chili R&D was profitable. The seed production program for BARI-Chilli-1should be done to increase production by increasing its area of adoption.

Suggested Citation

  • Hasan, Md. Kamrul & Banik, Bhagya Rani, 2015. "Economic Cost and Returns from Research and Development: The Case of Chili in Bangladesh," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 12(1), pages 1-13, June.
    • Handle: RePEc:ags:phajad:243240
    DOI: 10.22004/ag.econ.243240
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    1. Joseph G. Nagy & W. Hartley Furtan, 1978. "Economic Costs And Returns From Crop Development Research: The Case Of Rapeseed Breeding In Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 26(1), pages 1-14, February.
    2. Harry W. Ayer & G. Edward Schuh, 1972. "Social Rates of Return and Other Aspects of Agricultural Research: The Case of Cotton Research in São Paulo, Brazil," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(4_Part_1), pages 557-569.
    3. Currie, John Martin & Murphy, John A & Schmitz, Andrew, 1971. "The Concept of Economic Surplus and its Use in Economic Analysis," Economic Journal, Royal Economic Society, vol. 81(324), pages 741-799, December.
    4. Masakatsu Akino & Yujiro Hayami, 1975. "Efficiency and Equity in Public Research: Rice Breeding in Japan's Economic Development," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(1), pages 1-10.
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