Potential Sources of Growth in Funding for Chinese Agricultural Research
Ref. no. 681-19C
Expenditure on agricultural research in China appears to be declining in the face of an urgent need to increase yields. Research expenditure is now equal to only about 0.4 percent of agricultural GDP, and the share is decreasing despite recent findings of very high rates of return to agricultural research in China. In some provinces, however, funding for research has increased.
This research addressed two questions: Why is funding increasing in some provinces? And do these provinces offer lessons for other parts of China on ways to increase funding? The study used a combination of interviews with government officials during 1996 and 1997 and official data on agricultural research funding in 25 provinces in China in 199094. It developed a political economy model of provincial research funding and used regression analysis to test the model.
The findings support the induced innovation hypothesis. They show that government funding of provincial agricultural research responds positively to an increase in the demand for agricultural products and negatively to the availability of alternative sources of agricultural growth, such as land. Proxies for the strength of agriculture in the political economy, such as the size of the agricultural population or the percentage of the total budget devoted to agriculture, do not have a positive impact. The important factors are provincial tax revenues--provinces with greater total revenue spend more on agricultural research--and provincial interest in science of all types as measured by the percentage of provincial expenditure on science. Finally, the more income research institutes earn from commercial activities, the less money the government provides.
These findings imply that wealthy provinces, which have more tax revenue, more demand for agricultural goods, and tightening land availability, will invest more in agricultural research and that the gap in technological development between rich and poor provinces will widen. The negative relationship between earnings from commercial activities and government funds suggests that, to increase government research funding, research institutes should put less emphasis on increasing earnings from commercial activities.
The findings have been presented at the Center for Chinese Agricultural Policy in Beijing and at a Bank seminar in August 1997.
Responsibility: East Asia and Pacific, Country Department II, Rural and Social Development Division--Rapeepun Jaisaard (rjaisaard@worldbank.org); and Agriculture and Natural Resources Department, Agriculture and Forestry Systems Division--Derek Byerlee. With Carl E. Pray, Rutgers University.
Completion date: June 1997.
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