Effect of public investments on maize and cereal productivity

To help better understand the linkages between public investments and maize productivity within the broader cereals sector, this study estimates the effect of public spending in different sectors (e.g., agriculture, infrastructure, health, education, social protection, and defense) on the area harvested and yield of maize and other major cereals (wheat, rice, sorghum, and millet). The data used are compiled from multiple sources, resulting in a national-level panel dataset of 81 maize-producing countries from 1980 to 2015. We estimate a seemingly unrelated regression (SUR), consisting of eight equations (four for area shares and four for yields for each maize, wheat, rice, and millet/sorghum respectively), with country and year fixed effects and county-specific time trends. We find government expenditure (GE) on agriculture for example has a positive effect on area harvested for rice and sorghum/millet, a negative effect on area harvested for maize and wheat, and a positive effect on maize, wheat, and rice yields. GE on the social sector (education, health, and social protection) has mixed effects on area harvested for maize, wheat, and rice, but negative effects on their yields. GE on infrastructure (transport and communications) also has mixed effects on area harvested for rice and sorghum/millet, but positive effects on wheat and rice yields. GE on defense has negative effects on wheat and rice yields. CGIAR expenditures have mixed effects on area harvested for wheat (positive) and rice and sorghum/millet (negative), but no effect on yields. On the productivity effects, we find that it seems that GE on agriculture and infrastructure have been beneficial to the different cereals (except sorghum/millet), whereas GE on the social sector and defense have had the opposite effect. Although the role of agricultural research and development in raising cereal productivity and incomes and in reducing poverty is well established, deficiencies in governance, political institutions, and other factors have led to missed opportunities. Complementary investments, such as in rural infrastructure, are critical.