Rates of return to research: a literature review and critique

This paper examines current knowledge about the rates of return to research in the areas of agriculture and health research. The paper focuses on studies by the International Food Policy Research Institute (IFPRI) in Africa, China and India, which assert that increasing the investments in agricultural research and development increases agricultural productivity more than any other form of public investment in rural areas.

The research makes several findings and recommendations, including the following:

• there is a positive relationship between spending on research and economic and development growth
• rates of return to agriculture are significantly higher than comparable rates of return to education in developing countries.
• even though the IFPRI studies are an important contribution to current understanding of the efficacy of research in increasing economic growth and poverty reduction in developing countries, it is limited by its data quality and econometric problems.
• health investments can play a key role in promoting economic growth and poverty reduction throughout the world. Assuming an ideal policy and implementation environment, the economic returns for every $1 spent is estimated at about $3 or more than projected.
• there is a need for further empirical research that re-examines the IFPRI studies with better data.
• in order to maximise the benefits of agricultural research, governments must that appropriate complementary conditions, such as easily available credit, staple output prices, and access to fertilizer and seeds for farmers are in place.
• donors need to support agricultural and health research in developing countries.