98 | Agricultural Innovation in Developing East Asia
The benefits of international cooperation for AIS stem from the specialization it allows and from international spillovers. It is particularly important where global challenges (for example, responding to climate change) or transboundary issues (such as water use, pest and disease control, zoonoses) are confronted, and when initial investments are exceptionally high (Group of 20 2012). Crosscountry cooperation also allows countries to better leverage their domestic research resources, which may be particularly important for small countries with limited domestic R&D capacity. Thus, domestic investment in agricultural R&D does not convey the whole picture, given that many countries either have a prominent presence of International Agricultural Research Centers or have strong strategic partnerships with them (table 6.2). The Philippines, for example, hosts the International Rice Research Institute,18 and Indonesia is home to the headquarters of the Center for International Forestry Research and World Agroforestry and leverages significant international R&D. Strengthening scientific and knowledge exchanges with centers of excellence (CoE) in neighboring countries is also an important element of an innovation strategy for a small country with limited resources. However, relying on international R&D capacity may not be sustainable as a long-term strategy. All countries also collaborate with bilateral and multilateral development agencies and international research networks. The collaboration networks have centered largely on topics that receive less domestic attention (for example, livestock, farming systems, the environment) or pose significant cross-country challenges. For more details on international collaboration among the countries, see appendix F. FDI is one of the most important channels through which technology is transferred across countries. FDI reflects a country’s level of integration into international knowledge networks. Some countries’ AIS have attracted considerable FDI. For instance, in China, FDI and the associated special economic zones have contributed significantly to innovation through transfer of new agricultural technologies, knowledge, and finance (CDB 2015; Chen 2018) (box 6.4). China has also accessed foreign agricultural technology through direct acquisition of foreign firms. This strategy may speed up transfer of technology assets to China and preserve greater sovereign control but is financially costly to the Chinese economy (box F.1 in appendix F) (Fuglie 2016). Foreign research also plays an important role in transferring technology or knowledge to research agencies in Thailand (Suphannachart 2017). In Indonesia, FDI has been modest and volatile, and mostly concentrated in food and plantation crops. Although Cambodia and Myanmar enjoy relatively high FDI, limited R&D is involved (ADB 2019). However, foreign investment in agriculture and agricultural R&D is impeded in the region by inadequate investment conditions. Such conditions include, for example, infrastructure, finance, IPR, seed and biosafety regulations, land rights, and curbs on the use of FDI in agriculture (ADB 2019; Austrade 2019; OECD 2016, 2017b, 2018a).
RETURNS TO INNOVATION INCREASED BY REFORM OF AGRICULTURAL EXTENSION SERVICES AND INTEGRATION OF E-EXTENSION Investing in extension services has paid off. Traditionally, agricultural extension services have facilitated knowledge flows from research institutes to farmers and entrepreneurs. Often, however, agricultural extension has been forgotten
