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Private R&D Investments in Agriculture: The Role of Incentives and Institutions

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  • Alfranca, Oscar
  • Huffman, Wallace E.

Abstract

This paper presents econometric evidence of the effects of economic incentives and institutions on national aggregate private agricultural R&D investments. Amodel is proposed and fitted to annual data for seven European Union countries, 1984-1995. We find strong impacts ofboth incentives and mstitutions on private agricultural R&D investment, and including institutional factors strengthens the story and in some case changes greatly the results. In particular, we reject the hypothesis that quality ofproperty rights does not matter. We find that stronger contract enforcement, more efficient public bureaucracies, and stronger patent rights lead to larger aggregate private agricultural R&D investment, other things equal. Furthermore, we show that the impact ofacountry's patent rights on private agricultural R&D investment is amplified by it also having amore efficient public bureaucracy and alarger stock of agricultural higher education capital. We also find evidence ofpublic R&D crowding-out private agricultural R&D, which does support recent privatization policies. Inter-country private R&D spillins increase national agricultural R&D investment.

Suggested Citation

  • Alfranca, Oscar & Huffman, Wallace E., 1999. "Private R&D Investments in Agriculture: The Role of Incentives and Institutions," ISU General Staff Papers 199912010800001333, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:199912010800001333
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    1. Tokgoz, Simla, 2003. "R&D Spillovers In Agriculture: Results From A North-South Trade Model," 2003 Annual meeting, July 27-30, Montreal, Canada 22258, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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