International collaboration for a regionwide response to agri-food system challenges Returns to innovation increased by reform of agricultural extension

agricultural exports, value added in the export commodity sector is limited (World Bank 2016). However, Vietnam emphasizes innovation, for example, in emerging technologies and high-tech agriculture and food processing, with incentives for greater private R&D and overall investment. Private sector investment in all sectors is impeded by limited access to finance, talent and entrepreneurial skills, and management of IPR (Austrade 2019).

The countries exhibit much heterogeneity, owing to their respective states of development and the priority given to R&D and innovation. Most MICs, including those in developing East Asia aspiring to build stronger AIS, have imbalances in their existing AIS. The countries have largely public R&D institutions, but private sector–led R&D activity is low. Furthermore, domestic public R&D institutes and HEIs often have little interaction with businesses, which in turn exert little demand for their R&D-related services. Thus, demand-led R&D is still limited in the region, and stakeholders have relatively little experience in competitive research grants, matching grants, and research-innovation consortia17—all common instruments that foster co-innovation (table 6.2). Considerable room still exists for greater involvement of the private sector and other actors, such as cooperatives, farmer groups, and extension, in innovation processes. The size and organizational arrangement of R&D systems vary greatly across countries. In many countries, large numbers of scattered research organizations and HEIs or lack of overall coordination of R&D have resulted in inefficiencies in resource use. Increasing coordination of innovation and R&D institutions at the national level and the strengthening of evaluation mechanisms have, however, improved the efficiency of public funding to agricultural R&D.

Developing East Asian countries’ agricultural R&D focus is not suitable for addressing existing and emerging needs. There are significant cross-country differences in R&D allocation (table 6.2). Data on public R&D spending are limited or outdated in many countries; however, reports suggest that public R&D spending targets staple crops (especially rice) and commodities (Flaherty, Stads, and Srinivasacharyulu 2013; IFPRI 2019; OECD 2016, 2017a). Relatively little research is carried out on livestock (about 3 to 17 percent), fruit and vegetables, and post–farm gate activities (for example, processing, food safety) and multidisciplinary issues (for example, safety, nutrition, zoonoses, natural resource management, socioeconomic research). Consumer preferences, the poor status of the agro-ecological system, persistent food safety and nutrition challenges, and accelerating zoonoses indicate that public agricultural R&D allocation urgently requires adjustment to better accommodate emerging needs.

A country’s ability to generate new innovations depends crucially on its capacity to absorb and build upon existing ideas, most of which are often foreign. Thus, international knowledge links are central to the development of AIS and are often viewed as a catalyst for sector development. Such foreign technology and knowledge links may include FDI, licensing, international co-invention, labor migration, and international trade. nonmarket interactions, such as scientific collaboration and aid from governments in the form of development assistance, also play an important role in technology transfer and in capacity building (OECD 2013).