COMMENTS ON TECHNOLOGY * 



by 



Myles J. Watts ** 



What Is Technology ? 



Technological advancement expands knowledge of alternative production 

 methods. If a technological advance reduces cost. It will likely be 

 enthusiastically adopted. If the technology increases cost, then it will 

 probably end up on the shelf. For all practical purposes, it is practically 

 impossible to determine a priori whether a given research project will be 

 cost decreasing. In certain cases good judgment and educated estimates may 

 help direct research in a productive manner. The researcher is probably in 

 the best position to make this judgment. 



Research is a high risk investment where there are many low payoff 

 projects. On the other hand, those projects which are very successful have 

 extremely high payoffs. Most who have analyzed returns to public-funded 

 agricultural research agree the rate of return is relatively high. 



Research may reduce per unit cost by (1) increasing output at the same 

 level of cost, (2) decrease cost at the same level of output or, (3) more 

 likely some combination thereof. These types of technological changes 

 reduce per unit cost and have similar effects on economic variables and so 

 differentiating between cost-reducing and output-expanding technology is not 

 useful in most situations. 



* Prepared at the request of the Interim Agricultural Committee for 

 presentation on 9/19/86. 



** Myles J. Watts is Head of the Department of Agricultural Economics 

 and Economics, MSU, Bozeman. 



