Agricultural R&D investment intensity: A misleading conventional measure and a new intensity index

Abstract

The conventional wisdom that developing countries are significantly underinvesting in agricultural research and development (R&D) has been challenged by studies that found that the high rates of return in the literature result from data limitations and inadequate modeling choices. However, evidence of low research effort in developing countries as measured by the intensity ratio (IR)—the percentage of agricultural gross domestic product invested in agricultural R&D—has not been questioned. This article argues that the IR is an inadequate indicator of research effort and proposes an alternative index to measure R&D intensity. Using the proposed index, we find that the investment effort in developing countries is much higher than the one observed when the IR is used, that the contribution of low‐ and middle‐income (LMI) countries to growth in global R&D intensity was higher to that of high‐income (HI) countries in recent years, that the investment gap in LMI countries is close to 50% of R&D investment, and that the proposed development goal of a 1.0% value of the IR is beyond the possibilities of most Asian and African countries.

Public Investment in Agri-Food System Innovation for Sustainable Development

“…In reality, however, a country's capacity to invest in agricultural research depends on a range of factors, not just one. For this reason, Nin-Pratt [22] developed a more nuanced measure to estimate a country's attainable level of investment that combines the size of a country's agricultural sector with three additional variables: the size of its economy, its income level, and the availability of relevant technology spillovers from abroad. This measurement, the intensity index, is weighted according to a country's particular circumstances and comparisons with countries exhibiting similar structural characteristics.…”

“…Spending below this benchmark is considered an indicator of potential underinvestment. Compared with previously used intensity ratios, the intensity index provides a considerably different perspective on the intensity of agricultural research investment, with countries like China and India recording agricultural R&D investment intensities that are quite close to attainable levels [22] .…”

“…4). Underinvestment is most prevalent among countries with small and medium-sized research systems [22] .…”

“…4 Agricultural research investment gap by region, income group, and size of the national agricultural research system, 2016. Source: Calculated by authors based on Beintema et al [5] and Nin-Pratt [22] . Data indicate the investment gap in terms of its share of actual 2016 investment.…”

Innovation capacity, food system development, and the size of the agricultural research system

“…This global growth, however, was mostly driven by China and other large middle-income countries, while growth in high-income countries (HICs) has largely stalled (Beintema et al, 2020). Coinciding with the observed fast growth in R&D spending in low-and middle-income countries (LMICs), the global gap in agricultural research investmentthat is actual agricultural research investment as a percentage of attainable investment levels-dropped from 45% in 1996 to 39% in 2016 (see Nin-Pratt, 2021 for more information on investment gaps).…”