Incentives for Ag Innovation

Feeding an additional three billion people over the next four decades and improving food security for one billion people who are currently hungry or malnourished—all in an era of worsening land and water scarcity, climate change, and declining crop yields—is a dire challenge. Meeting it will require a giant leap in agricultural innovation in developing countries, similar to the 1960s Green Revolution.

“Pull mechanisms” are not a silver bullet, but some donors see them as a tool to address a particular intersection of problems—stimulating innovation, pulling in the private sector, and making aid delivery more effective by paying for outcomes rather than inputs. Kimberly Ann Elliott discusses the factors to be considered when choosing among pull mechanisms and assesses what the limited experience with pull mechanisms can tell us about the potential utility of these instruments in a 2012 policy paper, Ag Aid and Tech Breakthroughs: Pull Funding for Smallholder Productivity. The experience so far suggests that donors remain more comfortable with traditional ways of funding research and development from the top down and are still cautious about using new mechanisms that provide more space for innovation from the bottom up.

An earlier paper (Elliott 2010) reviewed the market failures that inhibit socially optimal levels of research and development—in developing countries in general and in developing-country agriculture specifically—and the factors involved in choosing between push and pull mechanisms.  During an open comment period, our readers weighed in on whether donor-funded, market-based financing mechanisms could help in the comments section below. 

Stay tuned to CGD’s Views from the Center blog for posts on this topic. We look forward to an ongoing dialogue, and hope that you continue to spread the word.

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