New Econometric Evidence on Agricultural Total FactorProductivity Determinants: Impact of Funding Sources

This paper examines the impact of public and private agricultural research andextension on agricultural total factor productivity at the state level. We test the hypothesis thatthe composition of agricultural experiment station funding—share of funding from impact offederal competitive grants and contracts and from federal formula and state governmentappropriationsaffectsthe productivity of public agricultural research using data for the 48contiguous states over 19701999.Our results show not only that sources of funding matter, butthat an increase in federal competitive grant funding at the expense of federal formula fundingwould lower the productivity of public agricultural research. Furthermore, our simulation resultsshow that a few states would most likely gain by a reallocationof federal formula to grant andcontract funding but most would lose.[...]