- The United States is a global leader in agricultural productivity. Much of its productivity growth can be attributed to public investments in agricultural research and development, starting in the 19th century and continuing until today. Past studies have shown high returns to agricultural research investments, but publicly funded agricultural research is a common target for politicians hoping to cut spending. As private research investments have grown while public investment has stagnated, there is some question about whether publicly funded research projects still have a significant impact on productivity. In order to answer this question, this study uses econometric models using Ordinary Least Squares (OLS) as an estimator to regress Total Factor Productivity (TFP) on total agricultural research spending as well as on the ratio of public spending to total spending, in conjunction with a set of other explanatory variables. It was found that increases in both total research spending and in the share of public spending were significantly correlated with increases in agricultural productivity. This adds to the evidence that overall agricultural research increases productivity and provides evidence that higher levels of public research spending specifically may have an impact on agricultural productivity.
- Key Words: Agriculture, Research, R&D, Productivity, Total Factor Productivity