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

Dandan Zhang (National School of Development, Peking University, Beijing, China.)
Chunlai Chen (Crawford School of Public Policy, The Australian National University, Canberra, Australia.)
Yu Sheng (Department of International Economics and Trade, Nankai University, Tianjin, China.)

China Agricultural Economic Review

ISSN: 1756-137X

Article publication date: 2 February 2015

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.

Keywords

Acknowledgements

JEL Classification – D24, N57, O32

The authors would like to thank John Mullen (from the Charles Sturt University) for his contribution and valuable comments in preparing this paper. The authors also would like to thank the two anonymous referees for their valuable comments and suggestions on the paper.

Citation

Zhang, D., Chen, C. and Sheng, Y. (2015), "Public investment in agricultural R&D and extension: An analysis of the effects on Australian broadacre farming productivity", China Agricultural Economic Review, Vol. 7 No. 1, pp. 86-101. https://doi.org/10.1108/CAER-05-2014-0052

Publisher

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Emerald Group Publishing Limited

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