Potential Complementarities Between Public and Private Sector Agricultural Research
Creators: name: Echeverría, Ruben G.
name: Echeverría, Ruben G.
Publisher: name: Unknown
Year: 1992
Subjects: Agricultural and Food Policy
Public Economics

description: Most of the literature on technical change in agriculture has focused on public-sector research although agricultural technology is not produced only by government research institutes. Private-sector organizations, play an important role in generating and transferring new technologies. The distinction between public and private sector research is not clear-cut. There is a complex, almost a continuum, of organizations conducting and/or funding agricultural research, which extends from government research institutes to private input and processing companies. An organization may be classified as public or private according to: ownership and control, sources of funds, and economic behavior. The type of private organization that predominate in conducting and/or funding agricultural research varies considerably among countries. Private research is located primarily in Latin America and Asia, and it is concentrated in a few large countries such as Brazil, Mexico, Argentina, and India. The boundary between the public and private sectors vary according to area of research, the type of technology, the level of development and other factors. That is basic, strategic, applied and adaptive research; and managerial, biological, chemical and mechanical technology. Privatization needs to be regarded in relation to certain types of research activities, specific technologies, as well as the public and/or private nature of the organization, and not as a panacea. All else being equal, the private-sector should be relatively larger where: there is open trade that fosters commercialization, and commercial development has not been stifled by regulation; the cultural endowments were amicable to the creation of institutions that encouraged commerce; and there has not been opposition to the market on ideological grounds. Institutional changes, that may take time, will be necessary for the evolution of a better balance between public and private activities. Public intervention in agricultural research is necessary in cases where markets fail. The private-sector will underinvest in research because of inappropriability, uncertainty and indivisibilites. In addition there is a range of further reasons for public intervention: preserving competition, complementarity with education, public goods, discounting the future, unemployed resources, intervention on distributional grounds, institutional innovation, support of policies and imperfect knowledge. There are cases that research must be conducted or supported by the public sector or it will not get done at all, that is it must cover the basic end of the research continuum and if it should fail to do so, there will be no downstream private research and hence no productivity growth. There are also arguments against public intervention, since market failure is a necessary but not a sufficient condition for government intervention. Three groups of factors influence the nature and the level of private agricultural research investments: (a) market factors, such as the expected growth in demand for agricultural products, derived demand for modern agricultural inputs, and factor prices facing farmers and agribusiness; (b) the ability of firms to appropriate the benefits from new technology; and (c) the technological opportunities for producing profitable products. The interaction between private- and public-sector research could take place through formal and informal channels. The structure and efficiency of the public-private interaction is affected by the amount and type of public and private research being conducted as well as by how much government policies and regulations impede (or discriminate) or encourage private-sector participation. Governments have a number of policy instruments with which to influence private research. Public-sector research can foster private-sector research by providing (or selling) research results and by training the personnel needed by private companies to conduct research. The development of intellectual property rights such as patents and plant variety protection laws, if they are well designed and enforced, can create the necessary incentives for private companies to invest in research. In the short term for the more-developed countries and in the medium term for the less-developed countries there is likely to be an accelerating trend toward privatizing agricultural research. Moreover, the nature of the technologies being developed in the public and private domain is also likely to undergo substantial change. Taken together, these changes will reshape the conduct of agricultural research in less-developed countries, the relationship between less- and more-developed country (public and private) research activities, and the policy agenda facing public agricultural research institutions.