Research and agricultural productivity in Indonesia

Growth of total factor productivity has contributed 41 per cent of output growth in Indonesian agriculture since 1975. This study examines the extent to which publicly funded agricultural research within Indonesia has contributed to this productivity growth, while allowing for other possible determinants, including spillovers from international agricultural research, extension, weather changes, and government trade and subsidy policy. The econometric results imply a real annual rate of return to a marginal increase in Indonesian agricultural research expenditure of 27 per cent. Government-financed agricultural research explains 56 per cent of the observed increase in total factor productivity since 1975.