Public Investments in and for Agriculture

Abstract

Within a policy environment of greater attention to agriculture following the food price crises in developing countries, this Special Issue is motivated by the importance of bringing to bear new conceptual and empirical research on the determinants, trends and consequences of public expenditures in support of the agricultural sector of developing economies. This introductory article lays the groundwork by first conceptually articulating the rationale for agricultural public investments. The articles in this Special Issue add to past literature in three main ways. First, careful analysis of newly compiled data provides new information on the patterns of agricultural public expenditures across developing regions. Second, the papers provide new insights on the cross-sectoral effects of different types of public spending and their complementarities and substitutability. And third, venturing into the examination of the political economy determinants of agricultural public expenditures opens the door to an important area of sparse research.Dans un environnement politique qui accorde une plus grande attention à l'agriculture, suite aux crises des prix des denrées alimentaires dans les pays en développement, ce numéro spécial est motivé par l'importance de mettre à profit les nouvelles recherches théoriques et empiriques sur les déterminants, les tendances, et les conséquences des dépenses publiques en faveur du secteur agricole dans les pays en développement. Cet article introductif jette les bases en exposant, de façon théorique pour commencer, le raisonnement qui sous-tend les investissements publics agricoles. Les articles de ce numéro spécial viennent s'ajouter au corps d'études existantes de trois façons principales: d'abord, une analyse minutieuse des données nouvellement compilées fournit de nouvelles informations sur les schémas de dépenses publiques agricoles dans toutes les régions en développement. Deuxièmement, les études fournissent de nouveaux aperçus sur les effets intersectoriels des différents types de dépenses publiques, sur leur complémentarité et sur leur substituabilité. Et troisièmement, s'aventurer dans l'exploration des déterminants de l'économie politique de dépenses publiques agricoles ouvre la porte à un domaine de recherche important et bien peu exploré.

Enabling Environment for Agricultural Growth and Competitiveness

“…In the public spending assessment studies (see, for instance, Mogues and Benin, 2012;Mogues et al, 2012;Fan, 2008), there are econometric estimates of the effects of different forms of public agricultural spending (e.g. research, irrigation, conservation) on agricultural factor use (e.g.…”

“…Some of the results of this literature are as follows, as summarised from the extensive review of existing studies by Mogues et al (2012):…”

“…Agricultural extension expenditures show relatively high returns and irrigation appears a positive investment in some countries, but not in others. The estimates cited by Mogues et al (2012) for China indicate that one monetary unit spent on general education yields more than 2 monetary units of agricultural GDP; for roads and telephones, between 1.5 and 1.7; and for irrigation and electricity, less than 1.5.…”

“…Estimates summarised in Mogues et al (2012) calculate than 1 million monetary units in China led to 1 200 fewer poor people when invested in education, while R&D was a close second, leading to a 1 000-reduction in the poverty headcount. The same calculations for India, based on one million monetary units, were 120 fewer poor people due to spending in roads, and 80 fewer due to R&D (the second largest impact); in Thailand, it was more than 250 fewer poor people for electricity and between 100-150 for R&D (also the second largest impact); and finally, in Uganda, this monetary level of R&D expenditure led to a reduction of almost 60 in the poverty headcount (the largest impact) and feeder roads ranked second with a reduction of about 30-40 person in the poverty headcount.…”

“… Sixth, returns to public expenditure on and for agriculture have been declining over time, with the exception of agricultural R&D. For instance, in the studies cited by Mogues et al (2012), the use of fertiliser subsidies in India had a larger impact in previous decades than more recently: in the 1960s-1970s 1 monetary unit spent on irrigation subsidies led to about 4-6 monetary units of agricultural GDP (lower than R&D which yielded between 8-10 units), but in the 1980s and 1990s the impact declined to between 2-3 monetary units of agricultural GDP (while the impact of infrastructure, the overall functioning of the national innovation system, the quality of the private sector, all necessary to complement R&D, but becoming "increasingly weak with distance from the frontier and the absence of which can offset the catch up effect".…”