Public investment in agricultural R&D and extensionand extension: an analysis of the effects on Australian broadacre farming productivity

Abstract

PURPOSE – The purpose of this paper is to analyze the effects of public investment in agricultural R&D and extension on broadacre farming productivity in Australia.

DESIGN/METHODOLOGY/APPROACH – An autoregressive integrated moving average (ARIMA) regression model is applied to estimate the effects of public investment in agricultural R&D and extension on Australian braodacre productivity.

FINDINGS– The study reveals that public investment in agricultural R&D and extension has contributed almost two-thirds of average annual broadacre productivity growth between 1952-1953 and 2006-2007, the average internal rate of return to public investment in agricultural R&D and extension was 28.4 and 47.5 per cent a year, respectively, and overseas spill-ins is an important source of domestic agricultural productivity growth.

PRACTICAL IMPLICATIONS – Policy implications: the findings suggest that increasing public investment in agricultural R&D and extension and maintaining agricultural R&D policy stability are equally important to have a sustained long-term agricultural productivity growth, and maintaining an open trade and investment regime is important to benefit from foreign knowledge spillovers which is especially important for developing countries.

ORIGINALITY/VALUE – This paper contributes to the existing literature by employing more sophisticated econometric techniques with an extended data set for the period from 1952-1953 to 2006-2007. The study separates the contribution of public R&D investment and the extension investment, and also takes into account the contribution of overseas public investment on the TFP growth in the Australian broadacre sector.