Fostering Productivity and Competitiveness in Agriculture

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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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Executive Summary

In a context of limited resources and high input costs, ensuring stronger productivity growth in the agri-food sector is essential to successfully respond to increased and more diversified demands for food and non-food use of agricultural products. Productivity growth has been the subject of renewed attention as recent developments in agricultural markets have reinforced concerns on global food security, sustainability, and on the challenges resulting from climate change. Productivity growth also reflects relative developments in agricultural competitiveness across firms, sectors and countries.

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