Key Messages

1. On average, investments in agricultural research and development (R&D) are still growing but at a de­creasing rate for the public sector during the 1990s. However, there has been an increasing diversity in in­vestment trends among countries. Investment in public agricultural R&D in many developed countries has stalled or declined and has become a small proportion of total Science &  Technology (S&T) spending. Many developing countries are also stagnating or slipping in terms of public agricultural R&D investments, except for a selected few (often the more industrialized countries). The slowing growth in agricul­tural R&D investment in the public sector has implications for attaining the development goals. Investments by the pri­vate sector in developed countries have been increasing, but have remained small in most developing countries. There is a knowledge gap in other areas of AKST investments such as extension, traditional knowledge, farming systems, social sciences, ecosystems services, mitigation and adaptation of climate change, and health in agriculture.

2. Funding for public agricultural R&D in developing countries is heavily reliant on government and do­nor contributions, but these sources have declined.
Despite declining government budgets for agriculture in general, and agricultural R&D specifically, government re­mains the major source of funding for public agricultural R&D in most developing countries. The trend indicates that donor support for agricultural R&D has substantially de­clined since the mid-1980s with the majority of this smaller amount supporting global research rather than research at the country level.

3. The participation of nongovernmental agencies in agricultural R&D is increasing. AKST in the more devel­oped world is increasingly undertaken by the private sec­tor. Private sector research is also growing in the developing world, but is concentrated in a few countries where the pri­vate sector thinks it can make a profit. In addition, high­er education agencies, NGOs, foundations, and producer groups are also increasing their participation in agricultural R&D. Still, publicly funded research in developing countries is mostly conducted by government-sponsored agencies.

4. There is evidence of underinvestment in research in agriculture. Rates of Return (ROR) in AKST across com­modities, countries and regions on average are high (40-50%) and have not declined over time. They are higher than the rate at which most governments can borrow money, which suggests underinvestment in AKST. Although limited, evidence indicates that the investments in agricultural R&D perform equally well or better than the other public sector investments in the agricultural sector.

5. Public investments in AKST have significantly con­tributed to overall economic growth, but this has not always translated into poverty reduction. Public invest­ments in AKST have in some countries significantly contrib­uted to poverty reduction, but AKST's impact on poverty varies greatly depending on the policies, institutions, and

access to resources of the country. Before AKST investments are made, distributional aspects should be explicitly taken into account. Additional analysis is required to understand better who has benefited from this additional growth and why it did not always translate into commensurate improve­ment of poverty and food security. Likewise, agricultural price policies and trade policies influence the distributional impacts of productivity-increasing technology, as do land and access patterns.

6. Rates of return alone are not sufficient to guide AKST investment decisions. AKST investment generates economic, social, environmental, health and cultural costs and benefits to society, some of which are considered as ex­ternalities (positive or negative) and spillovers. These non-economic impacts are also important to society, but often not included in conventional RoR analysis due to quanti­fication and valuation problems. The challenge is to factor these aspects into the macro-level decision-making process. RoR analysis needs to be complemented by other approach­es to estimating impact of AKST investment on poverty re­duction, ecosystem services and well-being. More evidence is needed on the economic and social impact of AKST in­vestment in sectors such as forestry and fisheries, as well as in policy-oriented social science research.

7. AKST investments could have been more effective and efficient in achieving sustainable development goals had more attention been given to governance.
Governance is an important determinant of mobilization of resources for AKST. It also plays a major role in alloca­tion of resources between different components of AKST. Increased demand for effectiveness, efficiency, responsive­ness to stakeholder needs, accountability and transparency is a driving force leading to changes in AKST investment decisions. High transaction costs in knowledge generation and transfer, inefficiency in resource allocation and utiliza­tion, lack of transparency, exclusion of some stakeholders, unequal access, and fear of private monopoly over tech­nologies developed through public AKST institutions have prompted changes in AKST systems. The ability to allocate resources more effectively will also depend on a significant improvement in the capacity in public and private sectors to forecast and respond to environmental, social, and eco­nomic changes, locally and globally. This will include the capacity to make strategic technological choices, create ef­fective public policy and regulatory frameworks, and pur­sue educational and research initiatives.

8. Increasing participation of nongovernmental stake­holders and more appropriate incentive systems are required to improve the effectiveness of AKST invest­ments. Institutional arrangements for AKST resource mo­bilization and allocation have, in the past, largely excluded users of research information, resulting in inefficiency and ineffectiveness in AKST investments. These arrangements have also resulted in unequal access to technologies. The demands for enhanced stakeholder participation, improved accountability and transparency are leading to institutional innovations around AKST investment governance issues. These are new and unproven arrangements, so investmentsa