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Fostering Productivity and Competitiveness in Agriculture

image of Fostering Productivity and Competitiveness in Agriculture

This report reviews economic concepts of innovation, research and development (R&D), productivity and competitiveness, and their linkages. It then discusses evidence on developments in productivity and competitiveness in the agricultural and food processing sectors and on the relationship between agricultural productivity and farm size, factor intensity, farm specialisation, human capital, consumer demand, the natural environment, investments in general infrastructures and R&D, regulations, and agricultural policies. It describes developments in public and private investments in agricultural R&D and outlines their positive impact on productivity growth. Finally, it suggests an “innovation systems” approach would help understand better how innovation translates into productivity growth.

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Determinants of productivity growth and competitiveness

A number of studies on agricultural productivity and competitiveness have tried to identify their main determinants. This chapter discusses the results they found regarding the impact of farm size, factor intensity, farm specialisation, human capital, consumer demand, the natural environment, investments in general infrastructures, regulations, and agricultural policies. The impact of R&D on productivity growth is discussed on the basis of the analysis contained in OECD Agricultural Working Paper No. 31 on the impact of R&D investments on productivity growth in agriculture. Estimation issues are first discussed and the importance of a good specification of the lags between investments and their observed benefits is outlined. According to the meta-analysis of over 1 000 estimates of returns to agricultural R&D reported in the Working Paper, the rate of return appears to be quite large, ranging between 20% and 80% per annum in most cases

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