Does R&D spur productivity growth in Australia’s broadacre agriculture? A semi-parametric smooth coefficient approach

Farid Khan, Ruhul Salim and Kai Sun

Applied Economics, 2018, vol. 50, issue 47, 5076-5093

Abstract: This article analyses the role of research and development (R&D) in Australia’s broadacre farming by using the semi-parametric smooth coefficient model. While the conventional production function approach only captures the direct effects of R&D, this methodology captures both the direct impact of a change in R&D on output and the indirect impact through changes in efficiency of use of factor inputs in the production process. Moreover, technical inefficiency is introduced in the model allowing it as a function of R&D. Using a unique state-level dataset covering the period 1995–2007, this empirical study finds that once both the direct and indirect effects are taken into consideration, R&D investments significantly increase outputs. The results also show that there are substantial variations in the effects of R&D on output across the state-level average farm through technology parameters as well as through technical inefficiency. Such variations need to be taken into account when designing policies for investing public R&D in agriculture.

Date: 2018
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DOI: 10.1080/00036846.2018.1470316

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