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Slow Magic: Agricultural Versus Industrial R&D Lag Models

Author

Listed:
  • Julian M. Alston

    (Department of Agricultural and Resource Economics, University of California, Davis, California, USA)

  • Philip G. Pardey

    (Department of Applied Economics, University of Minnesota, St. Paul, Minnesota, USA)

  • Devin Serfas

    (Department of Agricultural and Resource Economics, University of California, Davis, California, USA)

  • Shanchao Wang

    (Meta, Seattle, Washington, USA)

Abstract

R&D is slow magic. It takes many years before research investments begin to affect productivity, but then they can affect productivity for a long time. Many economists get this wrong. Here, we revisit the conceptual foundations for R&D lag models used to represent the temporal links between research investments and impact, review prevalent practice, and document and discuss a range of evidence on R&D lags in agriculture and other industries. Our theory and evidence consistently support the use of longer lags with a different overall lag profile than is typically imposed in studies of industrial R&D and government compilations of R&D knowledge stocks. Many studies systematically fail to recognize the many years of investment and effort typically required to create a new technology and bring it to market and the subsequent years as the technology is diffused and adopted. Consequential distortions in the measures and economic understanding are implied.

Suggested Citation

  • Julian M. Alston & Philip G. Pardey & Devin Serfas & Shanchao Wang, 2023. "Slow Magic: Agricultural Versus Industrial R&D Lag Models," Annual Review of Resource Economics, Annual Reviews, vol. 15(1), pages 471-493, October.
    • Handle: RePEc:anr:reseco:v:15:y:2023:p:471-493
    DOI: 10.1146/annurev-resource-111820-034312
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    More about this item

    Keywords

    knowledge stocks and flows; industrial and agricultural sectors; R&D; adoption; technological change; innovation;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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