Webinar by Tewodaj Mogues, International Food Policy Research Institute (IFPRI) on Sept 26, 2017. See abstract here: https://pim.cgiar.org/2017/09/18/webinar-what-determines-public-budgets-for-agricultural-growth-in-the-developing-world/ Fourth webinar in PIM's 2017 series (https://pim.cgiar.org/2017/05/11/pim-monthly-webinars-may-october-2017/)

1. What Determines Public Budgets for Agricultural
Growth in the Developing World?
Tewodaj Mogues
Senior Research Fellow, International Food Policy Research Institute (IFPRI)
PIM Webinar, 26 September 2017
Photo:GeorginaSmith/CIAT

2. A bird’s-eye view of
public investments to support agriculture
 Public investments are a central policy tool governments
in the developing world have to support agricultural
growth
 Other: regulatory property rights regimes, public sector
reform, etc.
 Public expenditure allocations affect, e.g.:
 the education and quantity of agricultural extension workers,
and the supplemental equipment they need to be effective
 the density and quality of feeder and village roads that reduce
farmers’ transport costs in marketing their products and
accessing needed inputs
 the existence and reliability of energy supply that is used by
agro-processors to operate mills and other machines

3. A bird’s-eye view of
public investments to support agriculture
 Critical social science research examines the impacts on
farmers’ welfare or agricultural performance of individual
projects and interventions
 Here, we take a bird’s-eye view of public expenditures to
agriculture, asking and addressing the following set of
questions:

4. Outline
1. How much is spent to support agricultural
productivity?
2. What are the impacts of public expenditures on
agricultural productivity and welfare?
3. What factors determine public financial allocations in
and for agriculture and food security?
4. Concluding reflections on potential avenues to
improve expenditure allocations

5. 1. How Much do Governments
Spend to Support Agriculture?

6. Agricultural public expenditures as a share of
total public expenditures
Statistics on Public Expenditures for Economic Development: https://www.ifpri.org/program/speed

7. Agricultural public expenditures as a share of
total public expenditures
-
2
4
6
8
10
12
14
16 1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
SSA
Source: SPEED ( https://www.ifpri.org/program/speed )
Maputo Food price
Declaration hikes

8. Agricultural public expenditures as a share of
total public expenditures
-
2
4
6
8
10
12
14
16 1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
SSA
Source: SPEED ( https://www.ifpri.org/program/speed )

9. Agricultural public expenditures as a share of
total public expenditures
-
2
4
6
8
10
12
14
16 1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
EAP ECA LAC MENA South Asia SSA
Source: SPEED ( https://www.ifpri.org/program/speed )

10. Agricultural public expenditure intensity
(ratio to ag. GDP)
-
10
20
30
40
50
60
70
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
SSA
Source: SPEED ( https://www.ifpri.org/program/speed )

11. Agricultural public expenditure intensity
(ratio to ag. GDP)
-
10
20
30
40
50
60
70
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
EAP ECA LAC MENA South Asia SSA
Source: SPEED ( https://www.ifpri.org/program/speed )

12. Total public expenditure intensity
(ratio to GDP)
-
5
10
15
20
25
30
35
40
45
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
EAP ECA LAC MENA SOUTH ASIA SSA
Source: SPEED ( https://www.ifpri.org/program/speed )

13. 0.0
0.2
0.4
0.6
0.8
1.0
1.2
2000 2002 2004 2006 2008 2010 2012 2014
Agriculturalresearchspending
asashareofAgGDP(%)
1 percenttarget
Sub-Saharan Africa
Agricultural R&D intensity (ratio to ag. GDP)
Source: ASTI ( https://www.asti.cgiar.org )

14. Sub-Saharan Africa
Agricultural R&D intensity (ratio to ag. GDP)
Source: ASTI ( https://www.asti.cgiar.org )
0%
10%
20%
30%
40%
50%
60%
1984 1994 2004 2014
Percentofcountrieswith>1%ag.
R&Dspendingintensity
Caveat: the sample of countries for older years is smaller than for more recent years, and the
countries in the data are not necessarily representative for all of SSA.

15. 2. What are the Impacts of
Agricultural Public Expenditures on
Agricultural Productivity and Welfare?

16. Correlation between agricultural R&D public spending
and agricultural GDP in Africa – 1-year lag
Calculations based on ASTI and WDI (World Development Indicators)

17. Correlation between agricultural R&D public spending
and agricultural GDP in Africa – 6-year lag
Calculations based on ASTI and WDI (World Development Indicators)
Suggestive evidence of
the long gestation
period of ag. R&D

18. Statistical analysis: Returns to agricultural R&D
expenditures in Africa (and other regions)
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0–20
21–40
41–60
61–80
81–100
100+
Shareofresults
IRR
Africa Asia Latin America
Graphical illustration of results of Evenson (2001) Handbook of Agricultural Economics
In meta-analysis, over 75% of the 374 studies find internal rates of return to
R&D expenditures that are higher than 20% in Africa. Also healthy IRRs in other
regions

19. Econometric analysis: Returns to agricultural R&D (vs.
other) expenditures in Uganda
Agricultural productivity Poverty reduction
 Returns to public spending on agricultural R&D are higher than those on
other key sectors such as rural roads, education, and health
 This is true not only for agricultural performance but also for poverty
reduction
Graphical illustration of results of Fan and Zhang (2008) African Development Review. Outcomes in 1999

20. Econometric analysis: Returns to agricultural R&D (vs.
other) expenditures in Tanzania
Household income Poverty reduction
Graphical illustration of results of Fan et al. (2012) Routledge, book chapter. Outcomes in 2001
0
2
4
6
8
10
12
14
Education Roads Ag R&D
0
5
10
15
20
25
30
35
40
45
Education Roads Ag R&D
R&D returns again high, but not always the highest

21. Data envelopment analysis (DEA): Investment gap in
ag. R&D
Nin-Pratt (2016) IFPRI Discussion Paper

22. Computable general equilibrium (CGE) analysis: Returns
to budgetary investments in agriculture in Rwanda
 Returns to total agricultural spending are lower than those to agricultural
R&D spending
 Public expenditures on different commodities have strongly varying returns
Diao et al. (2010) IFPRI Research Monograph. Modelling, with data from 2006 as input
National Ag. value National Ag. value
income added income added

23. Econometric analysis: Returns to agricultural
public expenditures in Ghana
Based on Benin et al. (2012) Routledge, book chapter. Outcomes in 2006
 Returns to agricultural public expenditures in terms of
agricultural productivity: 3.51
 This is an upper bound estimate
 Nonetheless, the returns are again lower than those to
agricultural R&D

24. Additional expenditures
on agriculture and
health do not have
statistically significant
impact on rural incomes
(given existing high
spending and given
modalities)
 Across the board
significant impact of
education
 In some regions, very
high returns to
spending on road
infrastructure
Mogues (2011) Journal of Development Studies. Outcomes in 2000
Impact on rural household income
Econometric analysis: Returns to agricultural
(vs. other) public expenditures in Ethiopia

25. Collective lessons from analyses on the impact of
public investments in agriculture in Africa
 High returns to public spending on agricultural R&D
 In absolute terms, but also when comparing to other types of
public expenditures
 Impact significant not only for agricultural productivity, but
also for incomes and poverty
 Returns to total agricultural expenditures are much lower
than those to ag. R&D, but still respectable
 There are clear variations in total ag. spending returns by
country (in some cases, returns to non-ag investments in
terms of rural welfare more important)
 The combined information on spending trends and
spending returns points in the direction of underinvestment
in agriculture (esp. in ag technology)

26. 3. What Factors Determine Agricultural
Public Expenditure Allocations?

27. What drives actual public expenditure allocations
for agriculture and food security?
Recent studies on the political economy determinants of
public expenditure allocation decisions in and for
agriculture
 Global review of evidence Mogues (2015) European
Journal of Development Research
 Africa-wide analysis Benin et al. (2016) IFPRI book
chapter
 Nigeria case studies Mogues and Olofinbiyi (2016);
Olofinbiyi and Mogues (2016). NSSP Working Papers
 Mozambique case studies Mogues and do Rosario
(2016), South African Journal of Economics; Mogues and
Billings (2015), IFPRI Discussion Paper

28. Visibility matters
▪ Information asymmetry between farmers and generally citizens
(users of public services) and government (providers of services)
shapes what types of public investments get prioritised
▪ Public leaders direct resources to those investments that are
relatively easy for ordinary people to attribute to government’s
action and efforts
▪ Agriculture is not always favoured in this context: visibility of other
types of investments are often more pronounced
Public official interviewed in study: “Well, they want to do things quickly to
ensure that he is re-elected, something visible; put up a town hall, put up the
buildings... these things people see”
▪ Within agriculture:
o Improving the quality of extension agents (better training, selection, etc.)
versus vouchers for subsidized inputs  latter gets greater budgetary attention
o More spending on visible large-scale irrigation than small-scale irrigation,
despite underperformance of former

29. Time(lag) is of the essence
Lag between public spending and outputs (goods, services, transfers,
infrastructure, etc.) a second key feature affecting attributability and thus
incentives to invest.
Public official interviewed in study: “Yes, agriculture is a time process. To
some extent it is very unattractive to policy makers who come in…for 3
years, he will not be able to see the evidence quickly…I said you raise the
seedlings the first year, we distribute the 2nd year. ‘You want to take all
my money into that sort of a thing?’ ”
Three pathways:
oA long lag from spending to outputs—ag. R&D is a pronounced
example—makes it harder to attribute latter to politicians’ efforts
oIn light of limited duration in political office, lag increases the odds that
public officials will not be around to take credit for public investments
oLong lag increases uncertainty about returns to spending
(macroeconomic shocks, world price changes, etc.)

30. Poor alignment between the distribution of
agricultural information and of budget influence
 Non-sectoral chief executives have an outsized role in
making public spending decisions—not only to agriculture,
but also within agriculture
 Public officials with agriculture portfolio and better agricultural
expertise are sidelined
 Local government actors with better granular information
on locally specific agricultural conditions are marginalised
in programming decisions
 The rules of public administration and budget institutions
do little to constrain the excessive influence of those with
less agricultural information

31. Investments by subnational elected executives focused on visible, rapidly delivered
infrastructure, goods and services
Poor alignment between the distribution of
agricultural information and of budget influence
Directions of potential benefit for quality of investment choices

32. 4. Concluding Reflections on Potential
Avenues to Improve Expenditure
Allocations for Agricultural Growth

33. Early-stage reflections on potential avenues to
improve budget allocation for agricultural growth
▪Analysts and practitioners need to become more cognisant of
approaches that can make agricultural productivity enhancing
public investments more incentive-compatible for those
making funding allocation decisions
▪Exploratory thoughts in this direction, derived from
implications of the studies described, and from insights from
existing evidence and work in progress (including by learning
from other sectors’ contexts)
▪Learn from successes as well as from failures alike

34. Early-stage reflections on potential avenues to
improve budget allocation for agricultural growth
▪Increasing the visibility of public investments in agriculture
oProactive efforts to “advertise” government’s role in increasing skills
upgrade and numbers of extension agents
oAfrican Union’s high-profile quantitative benchmarking of countries’
spending (10% agriculture’s share of expenditures; 1% ag. R&D spending
intensity)—has it worked? (Benin [2014, 2016] Discussion Papers)
▪Highlighting the current benefits of past long-term
investments
▪Providing external support that incentivises reliable, steady
government spending in ag. R&D  indirectly encourage
domestic institutions to exert pressure on entities with
short-term outlook

35. Early-stage reflections on potential avenues to
improve budget allocation for agricultural growth
▪Reducing information asymmetries between farmers (and
other rural citizens) and government (Kosec and Wantchekon
2017, manuscr.; Khemani et al. 2016, WB Policy Research Report) wrt:
opublic resources government allocates to support agriculture
othe goods and services these resources are responsible for
ohow these goods and services can improve incomes and welfare of
agricultural stakeholders
▪In so doing, lessons from studies suggest need to be
attentive to:
oreal and perceived credibility of the information source
otimeliness of the information (e.g. when farmers and stakeholders in
agriculture can act upon it)
othe institutional context, which frames the incentives that public
decisionmakers have to adjust investments based on information-
induced actions on the part of citizens

36. Early-stage reflections on potential avenues to
improve budget allocation for agricultural growth
▪Providing support to strengthen farmers’ associations
and cooperatives in ways to also improve their collective
action capacity to demand needed agricultural public
goods and services (related: Valdez 2011)
onot merely for collective action vis-à-vis market actors, or
for self-provision of services
▪If smallholders’ large number and dispersion impedes
collective action (Olson, 1985; Bates 1981) to press for
public investments relevant to them, does ICT have a role
to play to reduce constraints to collective action?
(related: Aker et al. 2017)
oi.e. going beyond ICT for market price info, extension, etc.

37. References
ASTI. Agricultural Science and Technology Indicators. International Food Policy Research Institute.
https://www.asti.cgiar.org
Badiane, O., Collins, J.,Diao, X., and Ulimwengu, J. (2015). Economic recovery in Africa and its determinants. In
O. Badiane & T. Makombe (Eds.), Beyond a Middle Income Africa: Transforming African Economies for
Sustained Growth With Rising Employment and Incomes (pp. 75–106). ReSAKSS 2014 Annual Trends and
Outlook Report. Washington, DC: International Food Policy Research Institute.
Benin, S. 2014. “Identifying Agricultural Expenditures within the Public Financial Accounts and Coding System
in Ghana: Is the Ten Per Cent Government Agriculture Expenditure Overestimated?” IFPRI Discussion
Paper 1365.
Benin, S. 2016. “Impacts of CAADP on Africa’s Agricultural-led Development” IFPRI Discussion Paper 1553.
Benin, S., L. McBride, and T. Mogues. 2016. “Why Do Countries Underinvest in Agricultural R&D?” In
Agricultural Research in Africa: Investing in Future Harvests, edited by J. Laynam, N. Beintema, J.
Roseboom, and O. Badiane. Washington, DC: IFPRI.
Benin, S., T. Mogues, G. Cudjoe, and J. Randriamamonjy. 2012. “Public Expenditures and Agricultural
Productivity Growth in Ghana.” In Public Expenditures for Agricultural and Rural Development in Africa,
edited by T. Mogues and S. Benin. London and New York: Routledge, Taylor, and Francis Group.
Diao, X., S. Fan, S. Kanyarukiga, and B. Yu. 2010. Agricultural Growth and Investment Options for Poverty
Reduction in Rwanda. IFPRI Research Monograph. Washington, DC: International Food Policy Research
Institute.
Evenson, R. 2001. “Economic Impacts of Agricultural Research and Extension.” pp. 573–628. In: B. Gardner and
G. Rausser (eds.), Handbook of Agricultural Economics Vol. 1A, Amsterdam: Elsevier Science.
Fan, S. D. Nyange, and N. Rao. 2012. “Public Investment and Poverty Reduction in Tanzania.” In Public
Expenditures for Agricultural and Rural Development in Africa, edited by T. Mogues and S. Benin. London
and New York: Routledge, Taylor, and Francis Group.

38. References
Fan, S., and X. Zhang. 2008 “Public Expenditure, Growth and Poverty Reduction in Rural Uganda” African
Development Review 20(3): 466-496.
IFPRI. 2015. Statistics on Public Expenditures for Economic Development (SPEED).
https://www.ifpri.org/program/speed
Khemani, S., E. Dal Bó, C. Ferraz, F. Finan, C. Stephenson, A. Odugbemi, D. Thapa, and S. Abrahams. 2016.
“Making Politics Work for Development: Harnessing Transparency and Citizen Engagement” World Bank
Policy Research Report.
Kosec, K. and L. Wantchekon. 2017. “Information, Governance and Rural Service Delivery”. Proposal for a
journal special issue
Mogues, T. 2011. “The Bang for the Birr: Public Expenditures and Rural Welfare in Ethiopia.” Journal of
Development Studies 47(5): 735-752.
Mogues, T. and L. Billings. 2015. “The Making of Public Investments: Champions, Co-ordination, and
Characteristics of Nutrition Interventions” IFPRI Discussion Paper No. 1479.
Mogues, T; and Olofinbiyi, T. 2016. Institutions and public agricultural investments: A qualitative study of state
and local government spending in Nigeria. NSSP Working Paper 37. Washington, D.C.: International Food
Policy Research Institute.
Mogues, T. and D. do Rosario (2016) “The Political Economy of Public Expenditures in Agriculture: Applications
of Concepts to Mozambique” South African Journal of Economics 84(1): 20-39.
Nin-Pratt, A. (2016) “Comparing Apples to Apples: A New Indicator of Research and Development Intensity in
Agriculture” IFPRI Discussion Paper 1559.
Olofinbiyi, Tolulope; and Mogues, Tewodaj. 2016. Who influences government spending in agriculture? The
roles of public actors in subnational funding allocation in Nigeria. NSSP Working Paper 36. Washington,
D.C.: IFPRI.
Pardey, PG, NM Beintema, S Dehmer, S Wood. 2006. Agricultural Research: A growing global divide?
Agricultural Science and Technology Indicators. International Food Policy Research Institute.

39. Related inquiries
Other research has examined related questions (of which only
some pertains to agriculture). Of the following three broad areas
of inquiry, we focus on the first
 Drivers of resource distribution by type of investment
(agriculture vs non-agriculture, selection within agriculture)
 Factors affecting ‘Legitimate’ public expenditures versus
leakage (e.g. Reinikka & Svensson [2005, 2011]; Ferraz & Finan 2011)
 Determinants of public expenditure allocation across
different groups in society (e.g. social groups, income groups,
political supporters vs “swing” voters) (e.g. Burgess et al. 2015;
Schaffer 2007)