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Annual Review of Resource Economics

Volume 15, 2023

Slow Magic: Agricultural Versus Industrial R&D Lag Models

Abstract

R&D is slow magic. It takes many years before research investments begin to affect productivity, but then they can affect productivity for a long time. Many economists get this wrong. Here, we revisit the conceptual foundations for R&D lag models used to represent the temporal links between research investments and impact, review prevalent practice, and document and discuss a range of evidence on R&D lags in agriculture and other industries. Our theory and evidence consistently support the use of longer lags with a different overall lag profile than is typically imposed in studies of industrial R&D and government compilations of R&D knowledge stocks. Many studies systematically fail to recognize the many years of investment and effort typically required to create a new technology and bring it to market and the subsequent years as the technology is diffused and adopted. Consequential distortions in the measures and economic understanding are implied.

Keyword(s): adoption, industrial and agricultural sectors, innovation, JEL 031, JEL L10, JEL Q16, knowledge stocks and flows, R&D, technological change
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2023-10-05
2024-04-29
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Slow Magic: Agricultural Versus Industrial R&D Lag Models
Annual Review of Resource Economics 15, 471 (2023); https://doi.org/10.1146/annurev-resource-111820-034312
/content/journals/10.1146/annurev-resource-111820-034312
/content/journals/10.1146/annurev-resource-111820-034312
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