Determinants and impacts of public agricultural research in Japan: Product level evidence on agricultural Kosetsushi

The public sector is an important source of agricultural research as the agricultural sector in many countries consists of a number of individual farmers who have difficulty in bearing the cost of research and development. Public institutes for testing and research called Kosetsushi help agriculture and manufacturing improve labor productivity through technology transfer activities, whereby constituting an important component of regional innovation systems in Japan. This study establishes panel data of agricultural Kosetsushi and examines whether their research activities are responsive to local needs and which type of research effort is conducive to the promotion of agricultural product innovations. Estimation results reveal variations across plants in the impacts of agricultural clusters on research on the plant conducted by Kosetsushi located in the cluster. A positive impact is observed only for vegetable while negative or statistically insignificant relationships are found for rice, fruit, and flower. The impact of research on plant breeding on agricultural product innovations also varies across plants. Policy implications of the major findings are discussed.