New Directions for Agriculture in Reducing Poverty

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"Demand-led" versus "supply-led" innovation



Colleagues, I'm glad that the science and technology portion of this
exchange is heating up!  I would like to applaud Dana Dalrymple's latest
posting, and would add the following:
 
Ultimately, all successful innovation must fill users' needs, or else it
will not be adopted.  But this does NOT mean that the users can or
should be "leading" the innovation, or even that users must participate
directly in the innovation process.  Of course end-users must
participate in the final stages of refinement of any innovation, but to
the extent that the whole innovation process is made demand-led and
participatory, it will be pursuing approaches that are already known and
available to the users: in other words, it won't be as innovative as it
might be.  One can think of a continuum, from what users know and can do
to what specialized researchers know and can do.  It seems clear to me
that poor farmers know more than anyone else can possibly know about
their own circumstances: what they can't do is how to make large changes
in the available technology, through new crop genetics, new mechanical
devices, etc.
 
As I see it, the key question is whether specialist innovators have a
real incentive to meet users' needs.  If they do, they will use their
specialized knowledge and skills to do something genuinely new,
something that the users can use but couldn't make for themselves.  Dana
Dalrymple's "supply-led" innovators have been successful where users'
needs are relatively easy for outsiders to see.  To make a gross
generalization, I think this was more the case for the large and
relatively homogeneous cultivation systems that benefited from the past
green revolutions, than it is for the patchy, agro-pastoral systems of
Africa and parts of South Asia, the Andes, etc. that have not yet
experienced a green revolution, and where it is not at all obvious to
anyone what technologies are likely to work best.
 
So, how to reward innovators to produce what users need, but can't make
for themselves?  One proposal is to introduce some "pull" mechanisms for
the funding of research, to complement the "push" mechanisms by which
donors fund projects and programs.  The terminology is due to Michael
Kremer, who considers pull mechanisms to be all payments that are tied
to adoption and impact: most notably that would be royalties from
patents, but it would also include "prize" payments paid for public
domain technologies.  
 
The trick in designing a pull mechanism is how to compute the value of
payments, and make a low-transaction cost mechanism for donors to reward
innovators.  A particular proposal for how to do this is detailed in a
recent journal article, available on-line at:
http://www.agbioforum.org/v6n12/v6n12a14-masters.htm
I won't go into details here -- there are also longer write-ups of the
proposal available on my own website, at:
http://www.earth.columbia.edu/cgsd/masters-news
 
I know that DfID has been interested in the pull mechanisms in the past
-- indeed their work with Michael Kremer stimulated the work that is
referenced above.  I would be very keen to hear what the community is
now thinking about this kind of payment device, and its potential to
help answer the question of how to make R&D more demand-led, without
losing its innovative character.
 
Will Masters
 ------------------------------------------
William A. Masters
Center on Globalization and Sustainable Development,
The Earth Institute at Columbia University
http://www.earth.columbia.edu/cgsd/masters

Visiting Professor of International and Public Affairs,
Columbia University

Professor of Agricultural Economics,
Purdue University
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