Mini-study project (MBA)--University of Stellenbosch, 2003. / ENGLISH ABSTRACT: This study considers the importance of research and development (R&D) investment
for enhanced productivity in the agricultural sector. In this regard, some detail of
R&D investments will be discussed. Focus is given to research intensity ratios and
government spending intensities in different parts of the world, for both developed
and developing countries. Furthermore, the extent of focus on investment activities
by the public and private sector, respectively, will be considered.
Aspects of agricultural R&D in Africa, such as the crisis of funding, incentives to
perform, priorities and procedures will be deliberated. Measures for reform will be
addressed. Thereafter, the sustainability of investment in agricultural R&D will be
emphasized. Roles and responsibilities of the public and private sectors, funding
adequacy, funding trends and mechanisms of funding are discussed. Attention will
be given to the impact public and agricultural policies have on both the level and
nature of agricultural investment. Furthermore, R&D efforts may impact a wide
audience and in this regard welfare implications for different interest groups are
evaluated.
Previous econometric studies are discussed. The relationship between R&D
investment and productivity in the sugar industry in South Africa is studied for the
period 1925-2001 within the context of a production function regression. Data were
obtained from the South African Sugar Association Experiment Station. The
dependent variable was sucrose yield, while the independent variables were rainfall,
land used in sugar production, technology and production costs. The techniques of
ordinary least squares and Ridge Regression, respectively, were used.
Using ordinary least squares, it was determined that the length of the R&D lag was
three years. The short lag length may be justified by the fact that research done by
the Experiment Station is of an applied nature and research, training and extension
are integrated by this commodity organisation. Furthermore, the education level of
South African commercial farmers is relatively high. All the variables were
economically relevant and statistically significant at the 1% level, except the land
variable, which was statistically significant at the 5% level. In addition, it was established that there was a structural change in the model during the period
concerned. The impact of technology on sucrose yield was higher during 1959-1979,
than either before or after this period.
Remedies and violations to the classic normal linear regression model were
considered. In particular, there was evidence of multicollinearity, as indicated by the
high condition index and variance inflation factors. Multicollinearity was addressed
using the technique of Ridge Regression (k=O,15).The R2 determined for this model
was 83,43%. All the t-statistics, except for land, were statistically significant at the
1% level. The t-statistics describing the technology and production cost variables
were higher in the Ridge Regression model. However, the land variable proved to be
unstable using Ridge Regression, as the sign changed. This made it difficult to draw
firm conclusions about the contribution of this variable. It was concluded that the
Ridge regression model provided the best fit to the data.
Finally, the rate of return to R&D investment in the sugar industry in South Africa
was calculated. Cost-benefit analysis yielded a benefiUcost value of 1,61, when
allowing for direct spillover effects to millers. Furthermore, the export realisation
price for sugar was used in the calculation. Costs included those of production,
harvesting and land. Using the three-year lag determined in this study, the internal
rate of return in the South African sugar industry was estimated as 17{20%. This
exceeds the discount rate in South African agriculture, the latter that is equal to 6%.
In conclusion, this study makes the argument that even if a commodity displays
public good characteristics, there may still be incentives for the private sector to
invest, especially if research benefits can be internalised in the industry. A prime
example of this situation may be seen in the sugar industry in South Africa, which is
privately-funded by industry levies. This concept can be stretched to include other
industries. Furthermore, this study established that there was sufficient statistical
evidence to conclude, that there is a relationship between investment in R&D and
increased productivity in the sugar industry in South Africa, at the 1% level of
significance. In addition, it was determined that these investments yielded a high .
rate of return. / AFRIKAANSE OPSOMMING: Hierdie studie oorweeg die belangrikheid van investering in navorsing en
ontwikkeling vir verbeterde produktiwiteit in die landbousektor. In hierdie verband,
sal sekere aspekte van navorsing en ontwikkelingsbeleggings bespreek word. Fokus·
sal gegee word aan navorsingsintensiteit verhoudings and regeringsbestedings
intensiteite in verskillende dele van die wêreld, vir beide ontwikkelde en
ontwikkelende lande. Verder, sal die mate waarin die publieke- en privaatsektore
betrokke is by investering in navorsing en ontwikkeling, oorweeg word.
Verskillende aspekte van navorsing en ontwikkeling in landbou in Afrika word
bespreek. Voorbeelde hiervan is die krisis in befondsing, motivering om te presteer,
prioriteite en prosedures. Stappe vir hervorming word oorweeg. Vervolgens, word
die volhoubaarheid van investering in navorsing en ontwikkeling beskou. Daar is
verskillende rolle en verantwoordelikhede vir beide die publieke- en privaatsektore
in hierdie verband. Verder, lê aspekte van befondsing, soos die genoegsaamheid
daarvan, verandering in maniere van befondsing en verskillende meganismes van
befondsing, onder die riem. Fokus sal gegee word aan die impak van publieke - en
landbouregulasies op beide die vlak en tipe landbou investering wat waargeneem
word. Navorsing en ontwikkelingsaktiwiteite beïnvloed 'n wye verskeidenheid van
belangegroepe. Die mate waarin hierdie groepe geaffekteer word, word oorweeg.
Die verwantskap tussen investering in navorsing en ontwikkeling en produktiwiteit in
die suikerindustrie in Suid-Afrika word vervolgens beskou. Vorige ekonometriese
artikels word bespreek, waarna modelle van meervoudige lineêre regressie bepaal
word. Data vir die periode 1925-2001, wat produksie in die suikerindustrie beskryf, is
verkry van die Suid-Afrikaanse Suiker Assosiasie Eksperiment Stasie. Die afhanklike
veranderlike is opbrengs van sukrose, terwyl die onafhanklike veranderlikes na
reënval, land onder suikerproduksie, produksiekostes en tegnologie verwys. Die
tegnieke van gewone kleinste kwadrate en rif regressie (Ridge Regression) is
gebruik. Deur die tegniek van gewone kleinste kwadrate te gebruik, is dit bepaal dat die sloer
voor die voordele van navorsing en ontwikkeling inskop, drie jaar is. Dat die sloer
wat bepaal is so kort is, kan gemotiveer word deur die feit dat die navorsing wat
gedoen word deur die Eksperiment Stasie, van 'n toegepaste aard is. Verder is
navorsing, opleiding en ekstensie is geïntegreer. Die vlak van opvoeding van Suid-
Afrikaanse kommersiële boere is ook relatief hoog. AI die veranderlikes was
ekonomies relevant en statisties beduidend by die 1% vlak, behalwe die
veranderlike wat land onder suikerproduksie beskryf, wat beduidend was by die 5%
vlak. Verder is dit bepaal, dat daar 'n strukturele verandering in die model ingetree
het. Die impak van tegnologie was groter tydens die 1959-1979 periode, as vóór of
ná hierdie tydperk.
Daar is verskeie aannames wat gemaak word met die gebruik van 'n lineêre
regressie model. Daar was tekens van multikolineariteit, soos duidelik deur die hoë
waardes vir die kondisie indeks en variansie inflasie indeks aangedui is.
Multikolineariteit is aangespreek deur die tegniek van rif regressie (k=0,15) te
gebruik. Die R2 waarde wat vir hierdie model bepaal is, is 83,43%. AI die t-waardes,
behalwe dié van land, was statisties beduidend by die 1% vlak. Dié veranderlike se
koëffisiëntleken het met rif regressie, verander van negatief na positief. Siende dat
die veranderlike geblyk het om onstabiel te wees, was dit moeilik om ferm
beslissings oor die bydrae daarvan te lewer. Wanneer die rif regressie model
vergelyk word met die model wat strukturele verandering beskryf met gewone
kleinste kwadrate, is die t-waardes wat tegnologie en produksiekoste beskryf,
heelwat hoër in die eersgenoemde model. Dit was beslis dat die rif regressie model
die beste passing vir die data gebied het.
Vervolgens is die terugkeerkoers tot investering in navorsing en ontwikkeling vir die
suikerindustrie in Suid-Afrika bereken. Die beraamde waarde vir die voordeel/koste
van navorsing en ontwikkeling was 1,61. Die voordeel wat deur
suikerindustriemeulenaars verkry is, is in berekening gebring. Verder is die uitvoer
realisasieprys vir suiker gebruik. Die kostes het dié van produksie, oes en
geleentheidskoste van land ingesluit. Die interne terugkeerkoers vir die
suikerindustrie in Suid-Afrika is bereken as 17,20%, inaggenome die drie jaar sloer voor die voordele van navorsing en ontwikkeling realiseer. Hierdie waarde is heelwat
hoër as die verdiskonteringskoers in die Suid-Afrikaanse landboubedryf, wat beraam
word op 6%.
Ter samevatting, in hierdie studie word geargumenteer dat al sou 'n kommoditeit
eienskappe van openbare goedere toon, daar tog motivering is vir die privaatsektor
om te investeer, veral as die voordele van navorsing en ontwikkeling in die industrie
self ge-internaliseer word. 'n Welsprekende geval hiervan is die suikerindustrie in
Suid-Afrika wat privaat befonds word. Hierdie beginsel kan gestrek word om ander
industrieë in te sluit. Verder was daar in hierdie studie oorweldigende statistiese
bewyse, by die 1% vlak van beduidendheid, van 'n verwantskap tussen investering
in navorsing en ontwikkeling in die suikerindustrie in Suid-Afrika en verhoogde
produktiwiteit. Vervolgens was dit bepaal dat hierdie investerings 'n goeie
terugkeerkoers gelewer het.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/53558 |
| Date | January 2003 |
| Creators | Nieuwoudt, Thalma Wilna |
| Contributors | Roux, A., Stellenbosch University. Faculty of Economic and Management Sciences. Graduate School of Business. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | Unknown |
| Type | Thesis |
| Format | 139 p. : ill. |
| Rights | Stellenbosch University |
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