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Recalibrating the reported returns to agricultural R&D: what if we all heeded Griliches?

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Title Recalibrating the reported returns to agricultural R&D: what if we all heeded Griliches?
 
Creator Rao, Xudong
Hurley, Terrance
Pardey, Philip
 
Subject agricultural research for development
returns
impact assessment
benefit-cost ratio
investigación agrícola para el desarrollo
retornos
evaluación del impacto
 
Description Zvi Griliches’ seminal analysis of hybrid corn spawned a large literature seeking to quantify and demonstrate the value of agricultural research and development (R&D) investments. The most important metric for quantifying the rate of return to R&D emerging from this literature is the internal rate of return (IRR), even though Griliches was sceptical of its usefulness as a metric in this context. An alternative metric, also reported by Griliches but not as commonly used in the subsequent returns-to-research literature, is the benefit–cost ratio (BCR). We assess how the implications of the returns to agricultural R&D literature may have differed if the BCR had become the standard rather than the IRR. We reveal that the IRR and BCR produce substantially different rankings of agricultural R&D projects, differences that persist even under various commodity and geographical aggregations of the BCR and IRR estimates. The median across 2,627 reported IRRs is 37.5 per cent per year. Using data gleaned from 492 research evaluation studies, we developed and deployed a methodology to impute 2,126 BCRs (median of 5.4) and modified internal rates of returns (MIRRs, median of 16.4 per cent per year) assuming a uniform 10 per cent per year discount rate and a 30 year research timeline.
 
Date 2020-07
2022-05-04T09:09:14Z
2022-05-04T09:09:14Z
 
Type Journal Article
 
Identifier Rao, X.; Hurley, T.; Pardey, P. (2020) Recalibrating the reported returns to agricultural R&D: what if we all heeded Griliches? Australian Journal of Agricultural Resource Economics 64(3) p. 977-1001. ISSN: 1364-985X
1364-985X
https://hdl.handle.net/10568/119455
https://doi.org/10.1111/1467-8489.12388
 
Language en
 
Rights Copyrighted; all rights reserved
Open Access
 
Format p. 977-1001
application/pdf
 
Publisher Wiley
 
Source The Australian Journal of Agricultural Resource Economics