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Abstract
Faced with the task of reorganizing the largest agricultural research system in the world,
officials in China are developing a strategy for reform. This paper investigates economies
of scale and scope and other potential sources of improvements in the economic efficiency
of crop breeding, an industry at the heart of the nation’s food economy. Using a panel
data set covering 46 wheat and maize breeding institutes from 1981 to 2000, we estimate
both single output and multiple output cost functions for the production of new varieties at
China’s wheat and maize breeding institutes. Our descriptive and analytical results
indicate strong economies of scale, along with small to moderate economies of scope
related to the joint production of new wheat and maize varieties. Cost efficiency
increases significantly with increases in the breeders’ educational status and with increases
in access to genetic materials from outside the institute. Our results can help guide
reformers in their efforts to increase the efficiency of China’s crop breeding system.