Effect of A gricultural R esearch on P roductivity and R ural P overty: Evidence from Iran

Abstract

Most developing countries have achieved productivity growth in economic sectors like agricultur e for more than 30 years. U niversities and governmental research centers have tried to generate knowledge with direct social and economic effects during th ese decades. So, productivity and production growth can be attributed to technological changes made possible through investment in agricultural research. Also, investment in agricultural research can have high economic return s as well as help s to reduc e poverty. Thus , this study investigate d the impa ct of agricultural research investment on productivity growth and poverty reduction in Iran during 1971 - 2010. To this end , firs t, an agricultural productivity trend was estimated . T hen , the effects of agricultural research expenditure on productivity growt h and poverty reduction were evaluated using a system of simultaneous equations. Results indicate that agricultural productivity grew during this time and agricultural research expenditure had positive effect on agricultural productivity and helped reduce poverty. Nonetheless, barriers like low adoption rate of improved agricultural technologies, lack of awareness of potential research benefits, weak extension systems and poor infrastructural development limited the impact of agricultural research on poverty reduction. Therefore, improving the operation of extension services as well as credit and input supply systems are instruments with which to raise returns to agricultural research investments. Keywords: Extension services, S imultaneous equations, Total Factor Productivity, Research investments