Effect of Agricultural Research on Productivity and Rural Poverty: Evidence from Iran

Most developing countries have achieved productivity growth in economic sectors like agriculture for more than 30 years. Universities and governmental research centers have tried to generate knowledge with direct social and economic effects during these decades. So, productivity and production growth can be attributed to technological changes made possible through investment in agricultural research. Also, investment in agricultural research can have high economic returns as well as helps to reduce poverty. Thus, this study investigated the impact of agricultural research investment on productivity growth and poverty reduction in Iran during 1971-2010. To this end, first, an agricultural productivity trend was estimated. Then, the effects of agricultural research expenditure on productivity growth and poverty reduction were evaluated using a system of simultaneous equations. Results indicate that agricultural productivity grew during this time and agricultural research expenditure had positive effect on agricultural productivity and helped reduce poverty. Nonetheless, barriers like low adoption rate of improved agricultural technologies, lack of awareness of potential research benefits, weak extension systems and poor infrastructural development limited the impact of agricultural research on poverty reduction. Therefore, improving the operation of extension services as well as credit and input supply systems are instruments with which to raise returns to agricultural research investments.