All national agricultural research in the region received direct government appropriations to finance their activities. In addition, Malaysia and the Philippines had either a pro­duction or an export tax on export commodities, which they partially used to augment limited funds for agricultural re­search and development. In Malaysia, this was done for rub­ber and palm oil. The Philippines taxed coconut, sugarcane and tobacco for the same purpose. External fund sources consisted of 32 bilateral donors, multilateral organizations and nongovernment foundations who generously supported the establishment of some national research, particularly in Indonesia, Korea, Myanmar, the Philippines and Thailand.
     With the globalization of science, the private sector re­portedly spent US$663 million on agricultural research in 2000, roughly 8% of the US$8.19 billion total agricultural research investment in ESAP countries. If private firms have limited opportunity to appropriate profits for themselves from providing agricultural technology, they lack the in­centive to invest. Hence, the private sector also often relied on knowledge provided by public research. Because of this market failure and long-term risky payoff, the public sector funded most agricultural research and development, espe­cially in developing countries (Tables 2-7 and 2-8).
     The International Food Policy Research Institute (IFPRI), using pooled time series and cross-sector data, conducted several studies on the impact of government spending on ag­ricultural growth and poverty reduction in China, India and Thailand. Results showed additional public expenditure on agricultural research and extension improved agricultural productivity the most and was the second most powerful way to reduce rural poverty. Some studies indicated that in low-income countries, a 1% increase in agricultural yield led to a 0.8% reduction in the number of people living be-

low the poverty line (Fan et al., 2002; Byerlee et al., 2006). Over the long term, food prices were especially important because food was a large share of the expense in poor house­holds. Employment and wages in labor-intensive production and value-added processing were also important for poor people, who depended more on wage labor.
     Most previous studies on return to investment consid­ered only public research and development expenditure, which made it difficult to compare returns to productivity growth and poverty reduction across investment portfo­lios. Both China and India have made great strides in re­ducing poverty dramatically over the last several decades. With more than 500 million people lifted above the poverty line, these two countries contributed a major share of the overall global decline in poverty (Thorat and Fan, 2007). Yet together, they still accounted for more than 40% of the world's poor. Therefore, to reach the millennium goal of halving the global number of poor by 2015 largely depends on their performance in alleviating poverty. Thailand for the past several decades has experienced rapid economic growth that has transformed the country from a predominantly agrarian society to a newly industrialized economy, much like Singapore, South Korea, Taiwan (China) and Hong Kong (China). Since the early 1960s, the Thai economy has achieved one of the highest long-term growth rates among all countries, with gross domestic product growth rates ranging from 5.5 to 11% each year from 1960 to 1995 (Fan et al., 2004). Lessons should be learned from the investment experiences of these three countries. Considering that the estimated returns were fairly recent, the results should be useful in deciding how the public sector can better allocate its limited resources to achieving economic growth, food se­curity and poverty alleviation.

Region

Expenditures (million 2000 international dollars)

Share (percent)

Public

Private

Total

Public

Private

Global

23,010

12,948

35,958

64

36

ESAP

7,523

663

8,186

92

8