Slow Magic: Agricultural vs Industrial R&D Lag Models

Julian Alston, Philip Pardey, Devin Serfas and Shanchao Wang

No 329835, Staff Papers from University of Minnesota, Department of Applied Economics

Abstract: R&D is slow magic. It takes many years before research investments begin to affect productivity, but then they can affect productivity for a long time. Many economists get this wrong. Here we revisit the conceptual foundations for R&D lag models used to represent the temporal links between research investments and impact, review prevalent practice, and document and discuss a range of evidence on R&D lags in agriculture and other industries. Our theory and evidence consistently support the use of longer lags with a different overall lag profile than is typically imposed in studies of industrial R&D and government compilations of R&D knowledge stocks. Many studies systematically fail to recognize the many years of investment and effort typically required to create a new technology and bring it to market, and the subsequent years as the technology is diffused and adopted. Consequential distortions in the measures and economic understanding are implied.

Keywords: Agricultural Finance; Industrial Organization; Production Economics; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Pages: 43
Date: 2022-12
New Economics Papers: this item is included in nep-agr, nep-ino and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:ags:umaesp:329835

DOI: 10.22004/ag.econ.329835

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