Chapter 22. The Economics of Innovation and Technical Change in Agriculture

Innovation in agriculture differs from innovation elsewhere in the economy in several important ways. In this chapter we highlight differences arising from (a) the atomistic nature of agricultural production, (b) the spatial specificity of agricultural technologies and the implications for spatial spillovers and the demand for adaptive research, and (c) the role of coevolving pests and diseases and changing weather and climate giving rise to demands for maintenance research, and other innovations that reduce the susceptibility of agricultural production to these uncontrolled factors. These features of agriculture mean that the nature and extent of market failures in the provision of agricultural research and innovation differ from their counterparts in other parts of the economy. Consequently, different government policies are implied, including different types of intellectual property protection and different roles of the government in funding and performing research. Informal innovation and technical discovery processes characterized agriculture from its beginnings some 10,000 years ago, providing a foundation for the organized science and innovation activities that have become increasingly important over the past century or two. This chapter reviews innovation and technical change in agriculture in this more-recent period, paying attention to research institutions, investments, and intellectual property. Special attention is given to issues of R&D attribution, the nature and length of the lags between research spending and its impacts on productivity, and various dimensions of innovation outcomes, including rates of return to agricultural research and the distribution of benefits.