Determinants and Effectiveness of Public Cocoa Research Expenditure on Cocoa Productivity in Ghana 1960-2008

Abstract

Cocoa research has been largely funded by the government of Ghana since 1960, with the aim of developing technologies that will increase productivity in the cocoa sector. The primary aim of this study was to model the detenninants and effectiveness of public cocoa research expenditure on cocoa productivity in Ghana. The study documents some of the innovations resulting from cocoa research so far, and employed time profiles and descriptive statistics to examine the history and composition of public expenditure on cocoa research. The Granger causality test is used in identifying the detenninants of cocoa research expenditure and the Cobb-Douglas production function in estimating the effectiveness of cocoa research. The study observes a generally rising trend in real public cocoa research expenditure with staff cost constituting 59% of cocoa research expenditure followed by expenditures on direct research (32%) and administrative activities (8%). The causality test results show that alternative sources of output growth, cocoa sector contribution to GDP, official development assistance and official aid, the incentive to increase productivity as indicated by the gap between actual and target yield, and the type of national economic management (whether socialist or market-oriented) granger caused the level of public finance allocations to cocoa research. The Cobb-Douglas production function estimates indicate that rainfall, labour, capital and real public cocoa research expenditure influence cocoa yield. The study fOWld that the effect of research expenditure is distributed over a period of twelve years with maximum impact occurring between the fifth and seventh years after the investment. The computed marginal product revealed that a unit addition to real research expenditure leads to 34kglha addition in cocoa beans to cocoa yield. An internal rate of return of 214% does not only show high returns to cocoa research but also an indication of underinvestment. This study recommends among others, the promotion of cocoa research. particularly as an effective means to increasing cocoa productivity in Ghana.