Public research and development (R&D) is a principal determinant of the rate and direction of technical change in many industries, particularly in food and agriculture. Consequently, empirical analysis of such publicexpenditures allocation has demonstrated that public R&D has been a major force in shaping the patterns of agricultural production, domestic consumption of food and fibers, and trade in food products. Agricultural R&D is thus a major determinant of economic development in general, and of agriculture in particular (Hayami and Ruttan 1985).
Some of the agricultural R&D activities are funded and performed by private firms, especially those engaged in the production of farm inputs such as computers, mechanical equipment, seeds (transgenic or conventional), fertilizers, pesticides, and irrigation equipment. However, in practically all countries, until recently most agricultural R&D has been funded by the public and performed by agricultural experiment stations, agricultural research centers, universities, and other non-profit, public-sector institutions. Legislative changes in the United States, notably the Bayh-Dole Act of 1980, have meant that patenting and licensing of new agricultual technologies is now actively pursued by public as well as private institutions in agriculture. In many cases, agricultural R&D has been initiated and supported through international cooperation involving international organizations, governments, and major foundations (Ruttan 1982; World Bank 2007).
There are several reasons for the heavy public involvement in agricultural R&D, specifically:
1. In most cases, especially prior to the establishment of codified private property sourced with modern biology discoveries, no individual producer can be fully barred from adopting and implementing an agricultural innovation.