132 | Agricultural Innovation in Developing East Asia
requirements of their fast-changing food systems. Continuing gaps between food safety capacity and requirements are especially challenging in rapidly urbanizing middle-income settings. Efficient and well-developed infrastructure, access to finance, and land rights play a critical role in connecting firms and farms to market opportunities and enhancing their ability to invest in and adopt innovations. Although the upper-middle-income countries have mostly good-to-excellent logistics and ICT infrastructure, lack of adequate productive infrastructure in several lower-middle-income countries still limits farm and firm potential. In most countries, financial services and instruments available to farmers and firms are an investment-limiting factor. Moreover, inadequate incentives for innovation-friendly FDI still prevent most countries from benefiting from foreign investment and innovation in agriculture. Reliable land rights and functioning land markets can improve access to finance and enable innovation. Indeed, many countries in the region have carried out consecutive land reforms that enable land to be used as collateral and facilitate land consolidation, rental, and sale. However, complex registration, allocation, and ownership of land rights still impede access to finance and investment by farms and firms in several countries. The countries that have been more successful in developing their enabling environment for agricultural innovation have taken the actions outlined in box 7.5.
BOX 7.5
Good practices for strengthening the enabling environment for innovation The following actions have been taken by countries that have more successfully developed their enabling environment for agricultural innovation: • Strengthening incentives that reward innovation by continuing to align intellectual property rights (IPR) protection laws with international standards and by continuing to improve enforcement of IPR (as in the Organisation for Economic Co-operation and Development). • Establishing and improving biosafety frameworks and strengthening enforcement of existing biosafety regulations to maximize the potential of biotechnology to improve productivity and the resilience of the sector (as in Brazil). • Strengthening food safety regulations and capacity, beginning with the most critical risks in the agri-food system, including via riskbased surveillance systems, is a condition for adoption and invention of many food safety innovations (as in the Republic of Korea and Singapore).
• Improving the quality of infrastructure and information and communication technology connectivity in rural areas to enable private sector market opportunities, investment, and innovation, and enhance the potential of e-commerce, e-services, precision agriculture, and other digitally enabled activities (to some extent, China). • Broadening the range of financing options available to farmers and firms (to some extent, Malaysia and Thailand); gearing instruments for innovation finance (for example, research and development tax credits, competitive innovation funds, venture capital) and other support for innovation-related investments (for example, incubators, support to matchmaking, and IPR management) toward greater private sector engagement. • Improving regulatory and institutional frameworks that govern agricultural land market operations in the rural economy to enhance longterm investments in agricultural productivity and sustainable growth (as in China and Thailand).
