Jacob Moscona, MIT

"Directed Innovation Meets Economic Development: Embrapa and Brazil’s Agricultural Revolution"

Abstract

Can public R&D investments in developing countries successfully redirect technological progress and drive productivity growth?  We study this question in the context of Brazilian agriculture and the Empresa Brasileira de Pesquisa Agropecuaria (Embrapa), a public research corporation established in 1973 to catalyze the development of locally appropriate agricultural science and technology. Using novel data on the career trajectories and research output of all agricultural scientists in Brazil, we show that employment at Embrapa increased researchers' productivity, especially in remote and research-scarce regions, and redirected individuals' research to focus on nationally prioritized staple crops and Brazil's specific ecological conditions. To study the effects of Embrapa on agricultural productivity, we develop a research design that exploits the staggered roll-out of research centers over time as well as heterogeneity across micro-regions in the ecological suitability of Embrapa's technology. We find that R&D investments in Embrapa led to higher agricultural productivity and land values, increasing both input use and and residual total factor productivity. A back-of-the-envelope calculation suggests that Embrapa accounts for 50% of Brazil's agricultural productivity growth since the 1970s, implying a cost-benefit ratio of 13 and an internal rate of return of over 70%. Taken together, the results suggest that state-led investment in R&D and the development of locally appropriate technology played a significant role in Brazil's "agricultural revolution''.

For more information about Jacob Moscona and his interesting work - link to his website.

Contact person: Pablo Selaya