Estimating Rate of Return on the Research and Development investment in the Iranian Agricultural Sector

Nowadays, agricultural R&D provides new and developed technologies to create modern agricultural producing methods. This paper investigates the relationship between TFP, domestic agricultural R&D, and foreign agricultural R&D during 1979 – 2009 by using Almon lag models. The results indicate that agricultural researches (both domestic and foreign R&D) have positive and significant impact on the agricultural TFP. According to the result, the long term coefficients for both domestic and international agricultural R&D were 0.16 and 0.19%, respectively. The Average of the internal rate of return (AIRR) was calculated up to 37 % for Iranian agricultural sector. The AIRR in Iran is low compared to the AIRR in developing countries, which is 54%. The results suggest that the government investment on the improvement in the human capital and the level of farmers’ knowledge influence the AIRR and TFP, positively.Furthermore the government should pay attention to the selection of the partner countries

Keywords:

TFP , Partner R&D , MIRR