94 | Agricultural Innovation in Developing East Asia
continues to invest in scientific capacity, training, and skills, and overall, in innovations with limited private sector interest (for example, smallholders in remote areas, climate-smart agriculture, improved natural resource management, maintenance of biodiversity, zoonoses) that typically fall outside the scope of purely private innovations. The public sector, in concert with international organizations, also needs to ensure predictable and consistent financial support to basic research. It must also be conscious of pursuing synergies and avoiding duplication of efforts to improve the overall efficiency of the use of financial resources (Group of 20 2012). However, the public sector could crowd out or regulate out private investment in agricultural R&D if it competes with private investors in the development of new technologies.12 Such crowding out can be avoided if the public sector focuses on the areas in which a large gap between social and private returns on investment exists (OECD 2018a).13 Box 6.7 discusses the shifting role of public and private agricultural research (both basic and applied) in transforming and urbanizing contexts.
BOX 6.7
The shifting role of public and private agricultural research and development in transforming and urbanizing countries Public agricultural research has continued to wrestle with the issue of how to be more responsive to demand and how to balance farmers’ needs with improved consumer acceptance. Private research capacity, however, develops principally where agricultural markets function well or where specific incentives exist to address market failures. Frontier science. As agricultural economies modernize and the private sector becomes more active in funding its own research, innovation turns more to the application of frontier science, and public research tends to support private companies by developing new products (for example, hybrid rice) or supporting private sector research. In agriculture, molecular biology and genomics represent this kind of frontier science, which is often supported through competitive grant schemes and in which universities often have a comparative advantage. For example, India’s National Agricultural Innovation Project (NAIP) operates a competitive grant scheme that funds innovation clusters around more basic research with potential applications of interest to the private sector. In Thailand, similar efforts are led by the Ministry of Science and Technology through its National Innovation Agency
and BIOTEC program, which also focus on funding clusters of research and related applications. In addition, BIOTEC has set up two independent research programs, the Rice Gene Discovery Unit and the Cassava and Starch Technology Research Unit. In these cases, public sector research is increasingly divorced from farmers as the primary clientele, relying instead on input markets as the mechanism for articulating farmer demand. Institutional innovations. Under these market- driven conditions, investments in public agricultural research tend to focus more on institutional innovations that reinforce the ties between research and the private sector. Intellectual property rights are emphasized to ensure open access to publicly generated innovations and to protect innovations developed in the private sector. Intellectual property rights are often the basis for contractual arrangements in public-private partnerships. This connectivity can be reinforced by competitive grants that insist on public-private partnerships, brokers that can mediate between public research and subsector needs, science parks adjacent to research institutes that focus on areas of joint research and development, and venture (box continues next page)
