Economic Implications 157 



Rates of Return and Marginal Benefit Streams 

 FROM Investment in Research 



From the point of view of the public servant or the welfare 

 analyst, the budget allocations to support research activity repre- 

 sent investments. The rate of return (as its equivalent, the bene- 

 fit-cost ratio), if properly computed, summarizes a great deal of in- 

 formation and can serve to guide investment. With this in mind, 

 we have summarized the findings of the several studies in this 

 volume in terms of estimated "internar' rates of return in table 

 9.1. 



It should be borne in mind that the benefits associated with 

 this investment are only partially appropriable to the economy 

 supporting the research. International transmission of knowledge 

 allows an economy to realize the benefits of research conducted 

 elsewhere. Table 9.1 reports the benefits realized both directly 

 and from capturing the benefits of research done elsewhere. 



The dominant theme emerging from the summary of rates of 

 returns in table 9.1 is that the levels of the estimated returns are 

 well in excess of normal returns in most cases. Internal rates of 

 return in excess of 20 percent (in real terms) on investments with 

 long gestation periods are well above the norm for most develop- 

 ment projects when properly computed. The returns to extension 

 activity and the lADP program are in the normal range. 



The technology transfer acceleration estimates are significant. 

 They indicate that the externalities which exist in research in- 

 vestment because of incomplete appropriability of benefits are 

 partially (perhaps fully in some cases) offset by the transfer 

 facilitation aspects. 



The general pattern of highest returns to the agriculturally re- 

 lated supporting sciences is also significant. This indicates that 

 research investment has been excessively biased in the applied 

 direction. The belief that the developing countries do not benefit 

 from this "pure" research is not borne out by our data. 



Lessons for Developing Countries 



For lack of data, much of the recent discussion of the role of 

 research in agricultural development has been void of factual 



