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comparison, adjusted for differences In the timing of benefits and costs. The 

 returns are consumer and producer surplus, and we have Just stated that these 

 benefits go largely to consumers (not producers). It Is easy to compare 

 Internal rates of return on investments of different types. In general a real 

 rate of return larger than 5 percent is good. Our economy as a whole has not 

 been able to sustain a rate of real income growth nearly this large. (Note 

 that GDP can be viewed as the average rate of return on an all inclusive 

 capital stock.) 



Our research, as well as several other studies, shows a otarginal social 

 rate of return to public R&D of about 40 percent. This is unusually large. 

 As a further comparison we obtained a lower social rate of return for public 

 agricultural extension of about 20 percent. We have, however, added more 

 dimensions to the calculations by considering rates of return to pretechnology 

 (an intermediate level of science) versus applied research and to crop versus 

 livestock research. Our findings are that the marginal rate of return was 

 significantly higher for public pretechnology than applied research and for 

 public crop than livestock research over the period 1950-1982. 



Vniat are some of the reasons for these differences? Pretechnology 

 sciences are an intermediate level of science between general and applied 

 sciences. These pretechnology sciences include plant physiology, plant 

 genetics, phytopathology, environmental sciences, animal and human physiology, 

 animal and human genetics, animal pathology, nutrition, climatology, soil 

 physics and chemistry, applied economics, statistics and econometrics, and 

 sociology. They provide productive linkages that help speed the trans- 

 formation of advances in general science into useful technologies and of 

 problems of applied scientists to general science. Pretechnology sciences 

 and applied sciences are optimally organized for the long term when they are 



