Governments in high-income countries are spending less on agricultural research. A new report from USDA’s Economic Research Service reviews long-term trends in public agricultural research and development (R&D) investment by high-income countries and examines how these investments have contributed to economic growth.
In high-income countries (the United States, European countries, Israel, Japan, South Korea, Canada, Australia, and New Zealand) as a group, spending on public agricultural research (adjusted for inflation) grew rapidly after 1960. However, this growth slowed significantly in recent decades and is now declining. In these countries, public agricultural R&D spending grew from $3.9 billion in 1960 to a peak of $18.6 billion in 2009, before declining to $17.5 billion by 2013.
The United States continues to lead in public agricultural R&D spending among high-income countries. However, the U.S. share of the total spending declined from 35 percent in 1960 to less than 25 percent by 2013.
Public agricultural research investment has been a major factor leading to growth in agricultural productivity. Higher agricultural productivity—getting more agricultural outputs for the total inputs used—has increasingly replaced greater use of inputs (such as land and labor) as the main source of growth in crop and livestock production. This is true for the United States and for other countries around the world.
Other sources of research that may increase agricultural productivity include private sector agricultural input research and research performed in other countries. These sources are not perfect substitutes for public sector research, however.
Private agricultural R&D does not make large investments in many vital areas, such as environmental protection and food safety and nutrition. Furthermore, some studies suggest that public and private agricultural research are complementary. In the United States, for example, a one-dollar increase in public agricultural R&D spending may lead to a 70-cent increase in R&D spending by the private sector.
In addition, agricultural technology is sensitive to environmental conditions and therefore tends to be location-specific. This implies that research in other countries may not be applicable to a given country without substantial modification. Technological advances in developing countries that have different environments are not likely to reduce production costs very much in high-income countries, which are almost entirely located in temperate zones.
Public agricultural R&D institutions in high-income countries have taken the lead in pursuing fundamental advances in agricultural sciences that make major technological innovations possible, which in-turn increase agricultural productivity. Neither the private sector nor developing countries appear likely to completely substitute for this role.
For more information on agricultural research and productivity, see our recent Agricultural Research Investment and Policy Reform in High-Income Countries report, archived webinar, Amber Waves Agricultural Research in High-Income Countries Faces New Challenges as Public Funding Stalls article, and Agricultural Research and Productivity topic page.