Optimizing Allocation Of Agricultural R&D Investment In China

Using national and provincial level data from 1978 to 2007, this paper evaluates the impacts of agricultural research and development (R&D) investment to agricultural economy growth and poverty reduction and marco-economy, and simulates the scenarios of how to optimize the allocation among agricultural sub-sectors and regions. Empirical research shows that the return of agricultural R&D investment is very high, and agricultural R&D investment also has significant impact on poverty and macro-economic growth. However, both marginal economic return and poverty impact of agricultural R&D investment vary from different zones and sub-sectors obviously, the effects on macro economy are different as well. Results that optimizing the allocation among zones and sub-sectors can improve the allocation efficiency.Eight agro-ecological zones are divided in China firstly, and econometrical method is used to evaluate the economical efficiency and impact on poverty in the past years, and math programming models are build under the optimal allocation principle that marginal return is equal to simulate the scenarios of how to allocate it and calculate its efficiency among agriculture sub-sectors and regions under two objectives of agricultural economy growth and poverty reduction. Base on the above re-search results, China dynamical computable general equilibrium model (DCGE) is developed to simulate the policies of agricultural R&D investment allocation, analyze the impacts on future na-tional economy and estimate the macro-economical return and efficiency of improving the allocation structure.From the aspect of region, the marginal economic return of agricultural R&D investment in HuaZhong zone is highest among all, HuaBei zone is the second one, DongBei and XiNan zones are at the middle level, XiBeiΙand XiBeiΠzone are lower relatively, HuaNan is the lowest one; while for the marginal poverty impact, XibeiΠand XiNan zones are mostly significant, XibeiΙand HuaZhong zones are second, DongBei and HuaBei zones are middle, HuaNan and DongNan zones are lowest. The increase in agricultural R&D investment in HuaZhong and HuaBei zones can promote the growth of agricultural economy, while more R&D investment invests to XiBeiΠand XiNan and XiBeiΙand HuaZhong zones can reduce poverty efficiently.From the aspect of sub-sector, if increase one unit R&D investment to livestock sector, the eco-nomic return is about 50 units, the returns of crop and fish sector R&D investment are around 30 and 15 units respectively. If 10,000Yuan R&D investment to livestock sector, about 28 persons poor peo-ple will be reduced,and about 17 and 12 persons poor people will be reduced if R&D invest to crop and fish sector respectively. In terms of both economic efficiency and poverty reduction, R&D in-vestment for livestock sector should be increased.Agricultural R&D investment not only accelerates the growth of agriculture economy, but also has positive impact on the growth of GDP, investment, consumption, trade and growth in other sec-tors, agricultural R&D investment increase growth rate of GDP by 0.3 percent, investment and con-sumption increase by 0.5 percent, especially the agriculture related industries and private service in- dustries increase more significantly, by 0.9 and 0.2 percent respectively. Ratio of macro benefit to cost is almost double times that of the sectoral benefit to cost, the average ratio of macro benefit to cost of crop, livestock, and fish sector is around 13, 14 and 6, respectively.Increase of the ratio of R&D investment to livestock sector can improve the total efficiency of agricultural R&D investment, and the increase of agricultural R&D investment can promote the growth of agriculture and national economy.Research results of this paper will be helpful for us to understand the importance of agricultural R&D in agricultural growth, food security, overall macroeconomic growth and poverty reduction, Agricultural R&D investment has extensive and far-reaching effects. All of these suggest the gov-ernment to increase agricultural R&D investment, tradeoff between efficiency and equity, increase agricultural R&D investment to middle and west region, especially increase R&D investment to live-stock sector, build the mechanism of central fiscal supporting to agricultural R&D in poor regions, enhance the research ability of local R&D institutes, help alleviate poverty, expand income source for poor people, and make the research work satisfy the needs of society.The main innovation of this paper is twin goals of growth and poverty reduction are considered when optimize the allocation of agricultural R&D investment, and dynamical CGE model is intro-duced to analyze the macro impacts of agricultural R&D investment, which expand our research scale, and also provides some useful digital evidence for decision making.